Preamble

The House met at half-past Nine o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Enterprise Initiative

Mr. Nigel Forman: I beg to move,
That this House recognises the importance of design, quality, marketing and manufacturing systems among the key issues which influence the competitiveness of British industry, and welcomes the policies of the Department of Trade and Industry, the Department for Enterprise, to promote greater attention to these factors in businesses both through the Enterprise Initiative and other measures.
It is my purpose to give hon. Members an opportunity to debate the enterprise initiative of this Government, especially those aspects of it that are intended to encourage better design, quality, marketing and manufacturing systems. The imperative for doing that is to be found in the need for our firms to compete in increasingly competitive national and international markets. Happily, the best firms in this country know that and have made great strides in recent years, which have been demonstrated by what has been achieved so far in improved performance, productivity and competitiveness.
However, there is still some way to go, by international standards, before all our firms, large and small, join these welcome improvements. For example, I am sure that the House is pleased to hear that manufacturing productivity in the fourth quarter of 1987 was more than 6 per cent. up on a year before, and up by more than 40 per cent. since 1979. Manufacturing profitability has risen every year since 1981, and in 1986 was at its highest level since 1973. Manufacturing output per head has grown faster in the United Kingdom since 1980 than in all other major countries, and even unit labour costs, which for so long were one of our principal problems in maintaining our international competitiveness, are now thought to be rising at a lower rate than those of our competitors.
All this is satisfactory evidence of movement in the right direction. In the future, we shall be able to maintain and improve our competitive edge only if we continue to improve our competitiveness in both price and non-price factors. A recent Design Council publication reported two pieces of interesting evidence in support of that assertion. The first was that an analysis of the different factors affecting the export of West German goods to the United States revealed that 47 per cent. were design-related, as compared with 28 per cent. that were price-related. So the design factor was by far the most important.
Another study of the reasons why British manufacturers bought foreign machine tools rather than British ones attributed 51 per cent. of the cause to design-related factors and only 5 per cent. to price-related ones. I therefore want to turn my attention to the crucial area of design.
The Design Council states in one of its excellent documents, entitled "Profit by Design":
Good design is not an optional extra — it is a vital ingredient in the success of any firm. To grow or even to survive British industry must offer products which can compete in quality, performance, cost and appearance in increasingly competitive world markets.
Our foreign competitors have known and practised that gospel for some time. For example, the Danish electronics firm Bang and Olufsen manufactures and sells beautiful hi-fi equipment in this country and other parts of the world. The German motor manufacturers Porsche, BMW and Audi in their various ways have made their products into quality, even cult, items through their excellent design. We have all heard the famous advertising slogan "Vorsprung durch Technik". That slogan brings a wry smile to people's lips, but it also makes a statement about the product and the way it is perceived. Such statements can be convincing in the eyes of the public only if they arc based on good design and sound performance.
We should also consider the Japanese camera and optical equipment firm Canon which happens to have its United Kingdom headquarters in my constituency. Canon has led the world with its SLR and compact cameras and now leads the world with its small tabletop photocopiers and other business equipment. Those are a few examples of firms whose success in the international market has been based on good design, among other vital factors.
Fortunately, the need for better design in British products has been recognised at the highest level in this country. Long before the latest enterprise initiative which my right hon. and noble Friend the Secretary of State for Trade and Industry was so right to launch earlier this year, my right hon. Friend the Prime Minister, doubtless as a result of the tireless efforts of my hon. Friend the Parliamentary Under-Secretary of State for Industry and Consumer Affairs, gave the lead by chairing a seminar on design at 10 Downing street in January 1982. Many hon. Members will be aware that it was followed by another seminar in January 1987 to monitor the progress and give further impetus.
The Design Council, first as the Council of Industrial Design from 1944 to 1972, and latterly in its present role, has played a valuable part in keeping the flag flying for the improvement of British design in all its forms. I submit that we need to do still more in every way to spread the best design practices throughout our industrial sector and especially among small firms which, if we define them as companies with 500 or fewer employees, constitute roughly 95 per cent. of firms in this country.

Mr. Paddy Ashdown: Is the hon. Gentleman suggesting that the definition of a small firm should be one with 500 or fewer employees? Is he aware that many people regard even the Bolton definition of 200 employees as being vastly in excess of what it ought to be?

Mr. Forman: I am aware of that. I thought that my comments might take the hon. Gentleman by surprise. However, a cut-off point of 500 employees is used in relation to enterprise counselling and other services available from the Department of Trade and Industry. That is why I used that figure. However, I accept the hon. Gentleman's point that a layman's definition of a small firm may be considerably smaller than one employing:500 employees.
Much that is happening in this area is being stimulated by the Government. I welcome the assistance available


from the DTI for consultancy arrangements on the design and development of new products and the redesigning of existing products to meet market, financial or production needs. It is important that firms should constantly assess and renew the quality of design, even when they believe that they have a market lead. These things do not remain static. I particularly welcome the fact that, since its inception in 1982, the support for design scheme has attracted nearly 7,000 applications for assistance, and 3,000 projects have been completed. I suggest that we need to generalise the best practice to ensure that it is taken on board throughout British industry among both large and small firms.
Perhaps one simple example will do more than anything else to illustrate my case. It is all too easy for arguments to become a little too abstract. As I recently bought a new jug kettle, I speak from experience in this matter. Indeed, I am well aware that my example illustrates the benefits of good design and I can vouch for the aesthetic appeal and effectiveness of the design. My example concerns a jug kettle, which, Mr. Speaker, you may have in your home or in your Apartment in the Palace of Westminster. The kettle is manufactured by GEC Redring. Approximately 65 per cent. of British households own a plastic jug kettle yet 15 years ago they did not exist. That shows the importance of innovation and design. According to a Design Council document "Profit by Design",
Redring supplied elements to kettle manufacturers and did not manufacture complete kettles. But the company decided to buy a conventionally shaped kettle made out of plastics and developed it to a satisfactory level of reliability. Being non-automatic, the profits were small and it was stopped after a year in which much valuable experience of plastic kettles had been gained. However, a London industrial designer"—
and here comes the element of design—
David Harris, was working independently on a design for a plastic jug kettle and had approached all the potential manufacturers to try to interest them in producing the new kettle design.
Redring Managing Director, Mike Johnson and Max Byrd, Development Manager, saw the advantages—a jug kettle can be filled with less than half an inch of water which can save up to £40 a year in electricity bills; it handles and pours better; plastic is much lighter and does not burn the user; perhaps most importantly, in the long run, the plastic jug kettle costs less to produce.
So Redring bought the rights to the design. Said Byrd, 'it was frightening and exciting at the same time—we had to start from scratch because there was no other kettle like it.' Development took about a year no—complete prototypes were able to be made so tooling took place straight off the drawing board.
The Redring kettle was launched in 1980. Within two years the company had 15 per cent. of the kettle market.
I quote that example at some length to show what can be done through a combination of imagination and determination with a simple product. Often the simple products most need the benefits of good modern design.
However, if we are to succeed in changing attitudes towards design throughout British industry, we will need to ensure that more managers understand that good design must be an integral part of the whole manufacturing process and that well-designed products sell better and can also be cheaper to produce.
That underlines the need to educate existing managers about the importance and value of good design and to ensure that design forms an important part of school and business management education. We must ensure that design is included in the national curriculum being

developed by the Department of Education and Science and that it is more widely accepted as a subject for A-level examinations.
The educational aspect of the problem poses a triple challenge. First, more design studies should be incorporated into business management courses, beyond the six schemes now funded by the DTI at five polytechnics and one college of further education. Secondly, we must increase business awareness among design students at degree level. Finally, we must plug the most serious gap in our educational provision in this area—the shortage of multidisciplinary product designers and design managers of the kind now being produced in only woefully small numbers in this country by Imperial College and the Royal College of Art in their pioneering course on industrial design engineering.
Happily, I believe that I am pushing at an open door. I take great comfort from the comments made by my right hon. Friend the Secretary of State for Education and Science when he opened a recent exhibition at the Design Centre in London. He made clear the direction in which the Government intend to raise the awareness of design in education still further. He drew attention to a £1.5 million initiative for pilot courses in engineering design in polytechnics and colleges and referred to the preparation of a consultative document on design in schools and mentioned action to improve the supply of craft design and technology teachers in schools. He said that recruitment to CDT teacher training courses—for which a new Government bursary is available—increased, I am glad to say, by 65 per cent. last year and 382 students enrolled on courses in the autumn of 1986, compared with only 231 in 1985. Clearly, we are making good progress in that direction, but we need to move further and faster, because it is vital to our competitive success.
It is a most welcome development that British industry is now putting much greater emphasis on quality. That is an increasingly important factor in maintaining and improving our international competitiveness and it should be an integral part of all manufacturing. As a chapter of the White Paper on the enterprise initiative points out, it is vital to encourage and improve quality and ensure that this is done through British standards and, increasingly, through international standards institutions as well. The fundamental insistence on quality must become part of the ethos of all firms. It must be built into their design and components and into the attitudes of their work force, from top to bottom. For many German and Japanese firms it is a corporate philosophy—almost a way of life. It would be good to see British firms following that lead.
I welcome the fact that the Government are playing their part with the national quality campaign, which has been going since 1983. I entirely agree with the Secretary of State's remarks in a recent document entitled "The Case for Quality":
The inescapable message from all this is that if you want your customers to come back, you need to ensure that your products don't.
Once again, we can learn from the Japanese and the Germans, who often achieve companywide commitment to quality and manage to involve all their employees in their quality campaigns.
An excellent example of what can be achieved by the application of quality cost management is provided by Mullard, part of the Philips group, which has factories in Blackburn and, incidentally, in my constituency. Mullard


has concentrated effectively on the application of quality cost management and applied it in producing tungsten filaments, picture tube cathodes and video discs. For the expenditure of small sums—the timely investment of not more than tens of thousands of pounds in each case—Mullard has managed to achieve terrific results, which prove absolutely that attention to quality and the upgrading of quality in existing products is the right answer for modern firms in a competitive environment. It pays off handsomely in terms of reduced costs, extra business and improved job satisfaction for employees, which also should not be underestimated. If one involves all employees in the upgrading of quality, they will become more fully committed to the standard of the product that they produce.
In better marketing, too, there are great opportunities for British industry to increase its competitiveness and market share both at home and in the export markets. Indeed, improved marketing is the next logical stage in the improvement of company performance, now that the necessary manning reductions, efficiency improvements and better industrial relations have been achieved in many cases. I therefore warmly welcome the marketing initiative, which is managed for the Department of Trade and Industry by the Institute of Marketing and which provides expert consultants to help firms to develop a more effective marketing strategy especially in export markets.
I understand that so far the financial support for the marketing initiative has trebled over the space of a few years to £6.25 million a year and that 1,400 companies have already taken advantage of the scheme. That is good news and my hon. Friend the Minister and his Department are to be commended for their contribution to our commercial success.
Schemes such as the marketing initiative can help companies with better presentation of their products, bring home to them the advantages of greater product differentiation and emphasise to management and all who work in British companies that, ultimately, the customer must be king. The success stories of companies that have adopted that approach—without any need for external stimulus — include some examples well known to the House, such as Amstrad computers and Clark's shoes, and we must encourage more of the same. One of the most important common denominators in all marketing success is firms' ability to look ahead and make full use of well-informed market projections such as those produced by the Henley Centre for Forecasting.
In the modern world in which the customer is king, it is vital for companies to have a clearer idea of new processes as well as new products and to spot the fact that consumer markets are increasingly defined in terms of community of interest rather than community in the geographical or class sense. Examples include the hi-fi community, the water sports community and the personal computer community. How many firms fully realise the potential for financial services and financial counselling now that as many as 75 per cent. of the population have a bank account? It is estimated by the Henley Centre that over the next 10 years real personal disposable incomes may increase by a further 20 per cent. The opportunities for the management of those new income flows will be considerable.
In such a rapidly changing commercial environment the firms that look ahead will stay ahead, while those that fail to do so will decline and may even go under. Let me give

a few examples to illustrate that. McCarthy and Stone saw the opportunities to provide for the aging population much more effectively and has benefited accordingly. Securicor saw opportunities to provide better security in times, alas, of increasing crime. Black and Decker saw the enormous opportunities provided by the DIY revolution and Beechams saw the possibility of turning Lucozade and Ribena—with the help of Daley Thompson—into drinks for the rapidly expanding health market.
Those examples show the importance of identifying and taking market opportunities and also how much can be done even without Government help, let alone with the backing of the schemes about which I am sure the Minister will tell the House later.
Finally, we need new manufacturing systems such as computer-aided design, robotics and other new methods of production management, which can all help to produce significant improvements in the competitive performance of British industry. As computers become relatively cheaper and better understood, it should be possible to encourage their wider application, especially in smaller companies. That will not only enhance the efficiency of production processes, but will encourage management to think through the challenges of businesses in a more systematic way. It should also have a beneficial effect on the suppliers and components manufacturers for large firms that have already computerised and automated their processes. The White Paper makes it clear that the adoption of such techniques is not simply a matter of buying in the technology; it is at least as much about changing management systems to integrate production, marketing and design and to improve quality.
In a sense, I have come full circle. Since the central message of the White Paper and all the Government's excellent efforts to foster enterprise and competitiveness in British industry is that we have now entered an era in which quality and the skills of management, acting in fruitful co-operation with fellow employees, will, more than anything else, determine the economic success of firms in this country. I commend my hon. Friend the Minister and his Department for all that they are doing, but I am sure that my hon. Friend will agree that, in the end, it is up to British industry to do more of what must be done.

Mr. Paddy Ashdown: I apologise to the House and to the Labour and Government Front Benches for the fact that I may have to leave rather earlier than I had hoped and therefore may not hear the winding-up speeches.

Mr. Austin Mitchell: Is the new party coming apart already?

Mr. Ashdown: The hon. Gentleman will know that we all have constituency duties outside the House and have to drag ourselves away from time to time, much as we might prefer to be here.
I congratulate the hon. Member for Carshalton and Wallington (Mr. Forman) on having secured the debate and chosen an extremely important subject. In the early part of his speech, he gave the official Government view and painted a rosy picture of the British economy. He talked about increasing competitiveness and unit labour costs. He failed — I understand why — to ascribe those,


developments in large measure to their real cause, which is the enormous exercise in the removal of manpower and growing unemployment in Britain. Nevertheless, I admit that efficiency in unit output has improved, but not enough to make Britain more competitive compared with our key European competitors, who have improved even faster. That is shown too clearly in the falling level of our share of world trade and, more than that, in our enormous and burgeoning trade deficits. I shall certainly touch on those matters, although the hon. Gentleman did not, because they are the underlying problems of the British economy. Many external commentators agree with me that those problems will come home to roost in short order.
To start on an optimistic note, the Government have done one or two things that needed to be done. I am not prepared to say that they have done nothing useful for Britain. That would be ludicrous. Their greatest achievement has been the democratisation of the trade union movement, ensuring that the government of Britain is returned to the democratically elected Parliament. That should not be reversed. Their second greatest achievement has been to set Britain on the road towards a much more enterprise-oriented economy, which will depend more on small business men, the self-employed, initiative and enterprise. Indeed, they have not been radical enough in pursuit of that aim.
One of the Government's great faults was apparent in the hon. Gentleman's speech when he defined small businesses as those with 500 employees or fewer. That is ludicrous. The Government have too readily understood the problems of large businesses and have been too ignorant of the genuine problems of extremely small businesses of one, two or three people, where assistance has always been provided to help with the initial set-up — that is commendable in itself — but where real assistance is required at the point of expansion when a business decides to double the number of its employees. That is the point when the prosperity that the business can generate and the jobs that it can provide receive a quantum leap, and at that point there is nothing except the business expansion scheme, welcome though it is. Far too much emphasis is put elsewhere.
The move towards an enterprise economy is to be welcomed, although it has not gone far enough, and for that reason this document, so far as it addresses that problem, is welcome. The rhetoric and hype are unexceptionable, but one must ask whether it is all that Britain needs now. One comes ineluctably to the conclusion that it is much more about public relations and hype than about tackling the underlying problems of the United Kingdom economy. Except for the stimulation of enterprise, the improvement in design, and new technologies, the underlying problems are not addressed.
What are those problems? We look at the rosy picture of the British economy of the hon. Gentleman and of the Government and we begin to see a picture of a wholly different hue. Since 1979 one fifth of our industrial base has been wiped away. It will not come back; it has been destroyed from the face of the map. Obviously, the world economy has passed through a period of restructuring, and no one would doubt that. I do not lay all the blame on the Government. But a Government with any kind of industrial strategy for the future have a medium-term

financial strategy, so why not an industrial strategy? I am suggesting not an indicative plan, such as the Labour party would have put forward in the 1970s and may even put forward now, but one that will point the way to the future and help us to overcome that period of restructuring as other western European industrial democracies have. In the free market system with its hands-off, know-nothing and do-not-care-less approach we have lost one fifth of the industrial base on which our industry will always depend. However great the growth in the service sector, the service industries depend in large measure on an industrial base and feed off it, as United States' experience shows clearly. Whatever shift in growth there may be, the decline of our industrial base is deeply damaging.

Mr. Forman: To put his case in perspective, will the hon. Gentleman concede that the problems of industrial adjustment and restructuring, which involve the decline of some parts of the traditional manufacturing sector and the arrival of other new manufacturing processes, has been going on in all western industrial countries?

Mr. Austin Mitchell: Not at this pace.

Mr. Ashdown: Indeed so, but, as the hon. Member for Great Grimsby (Mr. Mitchell) says, not at this pace. The regrowth of a new industrial base has not been assisted, and I am thinking of the new technologies. The hon. Gentleman and I will agree that we must move to a low resource use and high value added economic base. That means using new technologies. But we have seen the deficit in new technology trade grow to astronomical proportions in the past eight years. It is now running at about £3 billion a year. There is no evidence that those key strategic new technologies which we shall need to make the shift that the hon. Gentleman suggests are growing. The deficit shows that only too clearly. One of the brave statements in the document is:
The starting point of our strategy—one which I have called our enterprise strategy in the White Paper—is the need for business to succeed against world competition.
We are doing appallingly badly. Our trade deficit must cause serious anxiety, even to the Government whose predilection is these matters is to close their eyes and pretend that problems are not there. In 1980, we had a £1,361 billion surplus in trade; last year we were heading towards a £9.5 billion deficit. That is a shift of £11 billion in the past six years. Even in the new technologies, where we must do well to succeed, that deficit is as bad, if not worse.

Mr. Hugo Summerson: Does the hon. Gentleman accept that, nevertheless, our official reserves are at their highest level ever?

Mr. Ashdown: Of course, I am not saying that. Indeed, Britain has invested huge sums overseas. The hon. Gentleman knows as well as I that that has much more to do with the happenstance and luck of North sea oil and its effect on the British economy than any other underlying strength of our industrial and economic base outside the oil sector.
We should be seeing some action from the Government which will stimulate the long-term investment, which Britain lacks so badly, of patient money, such as occurs in Japan. Of course, it does not produce a return inside the year that the City operates, nor does it unhinge stocks and shares because it causes a temporary downturn in accounts


produced at the end of the year. We need to think about the strategic new technologies and about producing some stability in our exchange rate by joining the EMS.
The second major problem not addressed in the document is the terrible imbalance between the prosperous and pampered south-east, which is undoubtedly doing extremely well, and the other areas, which have largely been left out in the cold. The Government have unstitched and unpicked any concept of a regional policy. These factors come out clearly. Yesterday from the Library I got the figures for investment in venture capital to see what the regional disparities were. They are startling. I discovered that on the latest figures available 63.7 per cent. of all venture capital is now invested in the south-east. There is not a region, save only the north, which even gets into double figures. Actually, the north is just over double figures. About 11 per cent. of all venture capital is invested in the north. Obviously, that is welcome. However, in Wales the figure is 2.6 per cent.; in the south-west it is 4.9 per cent.; and only 5 per cent. of all venture capital has been invested in the midlands—an area that has been more devastated than any other by the economic and industrial restructuring to which the hon. Member for Carshalton and Wallington referred.
There is nothing in the document to begin to redress that. One cannot see signs of any effort by the Government to begin to have a programme to encourage industry and to give economic strength to other areas of Britain. The south-east of our nation is doing very well, but the rest of our nation is not. That imbalance cannot be continued without serious damage to our economy and perhaps to our social cohesion as well.
I turn next to what the Government say is their underlying strategy—their rhetoric about competition. I agree with that rhetoric and believe strongly that competition in the market place is absolutely vital. I believe that market forces should run the economy rather than the Government control it in minute detail. Indeed, the general view could be, "The market where possible, the state where necessary."
However, do we see that rhetoric of competition in the Government's actions? One can find it in the words in the document, but what actually happens? Let us take, for example, a public sector corporation such as British Telecom. Did the Government privatise that in a way that would encourage competition? Of course not. They converted a public monopoly into a private monopoly to assist their friends. When we consider what the Government have been doing about British Airways and British Caledonian, do we see that they have opted for a competitive approach? Of course not. We see a conglomeration of large elements in the market place, and that is anti-competitive. One finds the same with the privatisation of British Gas and in the Government's approach to the British Petroleum-Britoil affair.
Time and again, when the Government are given the opportunity to encourage competition, they opt for the larger semi-monopolistic forces in the market place, instead of generating real competition. Even in the case of the larger corporations—

Mr. Graham Riddick: rose—

Mr. Ashdown: I shall give way to the hon. Gentleman later.
Even in the case of the larger corporations, where one can see that in the interests of the consumers, the setting

up of watchdog bodies might be able to control the huge insensitive corporations, such as the privatised BT, the watchdog bodies are created in a manner which makes them almost totally toothless. However I agree with the hon. Member for Carshalton and Wallington that the consumer is a vital element and I should like the market place to be run by the individual choice of the consumer rather than by the power of the monopoly producer, of the mass producer and supplier.

Mr. Riddick: Can I assume, from what the hon. Gentleman has said, that he wholeheartedly welcomes the way in which the Government propose to privatise electricity in this country?

Mr. Ashdown: The hon. Gentleman asks a question, so I shall give him a straight answer. No, I do not wholeheartedly welcome it. Just because I expound a principle, that does not mean that I therefore ascribe to the total detail of what the Government do in any particular case. The hon. Gentleman might have asked me the same question about BT, and my answer to him would have been no, because the privatisation was not competitive. However, if one intended to privatise the electricity industry, there could be a case for keeping the grid in national hands and then having privatisation of suppliers feeding into the grid. If we are to achieve competition, I believe that that is the way we shall do so. Creating a situation where one body has 70 per cent. of the market, and the rest 30 per cent., is not competitive. Indeed, that is creating sharks and minnows in the market place, which is exactly the opposite to what I believe should happen, and to what it seemed to me that the hon. Member for Carshalton and Wallington might have been proposing.
I move on to a subject on which I have already touched briefly—

Mr. David Wilshire: The House should not allow the hon. Gentleman to get away with his comments about toothless watchdogs, because we recently had a prime example of Oftel drawing the attention of British Telecom to its chat lines and abuses of them. If being bitten by a toothless dog results in one taking pretty prompt action, I think that such watchdogs are effective.

Mr. Ashdown: The hon. Gentleman has chosen the one area in which they have been effective. I shall be more generous to Oftel because it has tried hard to do a good job within the constraints. Over the issues of Talkabout programmes and telephone boxes, on which it has recently done a good job, that watchdog has been effective. However, there are many other areas. I suggest that we would not have got into this powerless situation with regard to the inefficiencies and inadequacies of BT if Oftel had had the power to operate much earlier. The fact that it has now been able to operate does not mean that the organisation is perfect. Indeed, in different circumstances that situation may not have occurred. Anybody, including those inside Oftel, would agree that some of its powers are inadequate to the task of controlling what is a huge private monopoly.
I move on to another besetting problem on which I have touched previously. I refer to the short-termism which runs the British economy and which certainly runs the investment sector. One sees, hears and reads about that time and again in the City of London—a place where young men earn £120,000 or £130,000 per year when they


are not yet 30, on the basis of a turnaround and profits shown in the portfolio of their stocks, measured over a week. In that situation, Britain is manifestly not making what I have already described as those patient money investments to bring on the new technologies in a manner that would return investment to the nation in the years to come. Instead there is a candyfloss, hamburger-style economy in which, if one cannot make a profit inside a year, one had better not continue the operation. In such a situation, the stocks and shares of any given company will fall according to what the published accounts say because people are making snapshot decisions instead of looking underneath to discover whether the company is making long-term investments. Indeed, all too frequently, a company that makes a long-term investment in technology becomes prey to a raider because the price of its stocks falls and it gets snapped up. There is a degree of technology buy-out in the same way as there was asset and property acquisition in the 1960s and 1970s.
It is not surprising that the City of London behaves in that fashion because it is set that model by the Government who also behave in that fashion. The short-termism that runs through the Government at present is deeply unpleasant, unwelcome and unhealthy for our future economy.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. John Butcher): indicated dissent.

Mr. Ashdown: The Minister is shaking his head, so I shall give him an example. When the Government privatised British Telecom or British Gas — I do not doubt for a second that there was a case for privatisation, and although I believe that British Gas should not have been privatised, I saw no reason why Rolls-Royce should not have been privatised and put in the market place if it was done in a reasonable fashion — if they had been taking a long-term view, they would have used that money to invest in the British economy, and not to pay off that year's bills or to balance the books. No sensible business man would dispose of assets in that fashion. The Government use money in a short-term way, and that affects others who make investment decisions.
None of those problems are addressed in the document although they should be, because they are the besetting, underlying difficulties and problems of the British economy. Instead we have what I can only describe as a degree of public relations hype. One need only consider the advertising budget for the initiative, which is now bigger than the budget for the small firms unit, as I think the Minister knows, in Lord Young's previous Department, the Department of Employment. The advertising budget is huge, and in some ways it is a waste. If the document seeks to give a profile to enterprise, that is useful, but why not tackle the real problems of the British economy? Sam Brittan in the Financial Times said that he thought it was a
sender up of Thatcherism by a hostile satirist.
Perhaps one can understand those comments because the way in which this matter has been handled is ludicrous to the point of being farcical. Chapter 7, for instance, states:
In all our work we will take account of the differing circumstances of the regions and of the Inner Cities to enable those who live there to help themselves.

The document tells us that we are about to become aware of the problems of Britain's regions. However, if one picks up the popular version of the document, one finds that there is not much evidence that the DTI knows about the regions outside London. Having looked at it the other day, I noticed that, on the map, Cardiff has been put where Swansea is, Poole where Weymouth is, Reading where Oxford is and Coventry where Worcester is. There is not much evidence that the Department knows its way around anywhere outside the City of London.
Is that the kind of efficiency that we would expect the Department of Trade and Industry to set as an example for others? I am told that the calendar that it has produced had one week that contained three Tuesdays. The Department does not seem to know its way round Britain, or even what time it is. That is not a good example to set for industry. If that is what the Department of Trade and Industry means by showing concern for efficiency and a knowledge of the regions of Britain, I am not impressed. I do not suppose that other people will be impressed either, except those who are impressed by the candy floss of the PR man.
I accept the need for the move towards an enterprise economy. There is a need to go faster, to be more radical and to encourage small businesses and enterprise, but the document is a triumph of public relations over hard policy. There is nothing in it that will tackle the balance of payments problems which are inexorably approaching Britain. There is nothing in it to tackle the growing trade chasm which is opening up. There is nothing in it to end the tragic divisions between the pampered, prosperous and, in many ways, profligate south-east and the dog-eared dereliction that one finds all too frequently elsewhere in the old industrial bases of the nation.
There is nothing in the document to remedy the devastated industrial base of Britian. There is nothing for that consuming short-termism which is mortgaging the future for a quick buck today, stimulated by a Government who have set the pace by flogging off public assets, not for investment, but to squander on this year's bills. There is nothing to solve the deep-seated, underlying problems which have caused Britain to fall behind her industrial competitors, both in their effectiveness and in their share of world trade. If the Government turned their attention to those problems, we should sit up and listen, but this is, frankly, fiddling while Britain's industrial base is in severe danger of decaying in a way which will damage our future economy and perhaps the social cohesion of our nation.

Mr. Hugh Dykes: The Liberal spokesman, the hon. Member for Yeovil (Mr. Ashdown), made an interesting speech and I agree with many of his arguments. Everyone who listened to his speech will regard it as a balanced contribution to the debate.
There is a surprised expression on the face of my hon. Friend the Member for Watford (Mr. Garel-Jones), the Vice-Chamberlain of Her Majesty's Household. It is sometimes possible to refer to a speech by a member of another party and to say that there are some points worthy of attention or agreement, without it being regarded as heretical. The notion that one must never agree with anyone in another party strikes me as very strange, but perhaps I am being unfair to my hon. Friend, because he


cannot speak in the House. Nevertheless, he can speak outside the House where he no doubt makes robust speeches on the policies that we are debating today.
I add my congratulations to my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) on his personal enterprise initiative in selecting this subject for debate. He will not misunderstand me when I say that the acceptability and blandness of his motion means that everybody can agree with it, but that is good sense in itself and a traditional Conservative approach to policy matters. It contains some good points which need wholehearted support.
I apologise for having missed my hon. Friend's initial remarks, but he is right in saying that, whatever ideas come from other parties, the Government and the Conservative party have a strong monopoly of ideas in this area. I also add my support and commendation for what the Government have achieved, very remarkably, since 1979 in respect of some aspects of the long-term transformation of the economy.
However, there are considerable problems that still need tackling. The fact that they have not yet been tackled reflects, to some extent, the excessive divisiveness of our political system which has become more pronounced in recent years and has prevented us from reaching the consensus solutions which are required urgently by Parliament and by any Government to overcome those problems.
The old curate's egg description of the Government's achievements would be right. When I say that, I do not wish to alarm my hon. Friend the Member for Watford by seeming to be churlish, as I am most enthusiastic about some key elements of the Government's achievements. Although it is an intangible and ethereal factor and, to some extent, an emotional and psychological point, one of the most important factors has been the change of attitudes. A great friend of mine, who is a peer in the other place, has a reputation for getting up at 11 o'clock in the morning in the traditional style of peers. I was rather amused when he said that one of the most marvellous things that the Government have done is to bring in a new work ethic. I shall not name him, as it was an accidental remark, although, if he reads Hansard, he will know that I am referring to him. He was correct about all the other citizens of this country, but not about himself, as he still gets up at 11 o'clock.
There has been a great change in attitude and a reinculcation of the work ethic. I am a City person and admit that the City is often justly criticised. However, people in the City come into work early, not just the ordinary employees in any organisation, but the people who run that organisation. We also see that in industry. The attitude to work, for those who are fortunate to have it, has improved enormously from top to bottom. For example, directors and employees in factories are now on first name terms, but, in some traditional establishments, that used to be regarded as wicked only a few years ago. Such points may he considered trivial, but they are important factors in that change.
When the hon. Member for Yeovil referred to the Government's achievements in respect of trade unions, he was supporting an aspect of Government policy. Those are definite, unshakeable achievements which are admitted by all trade unionists, not simply Right-wing trade unionists. They will represent a tangible, monumental achievement for this country if their effects are lasting.
I pay tribute to the Government Departments, particularly the Department of Trade and Industry. I do not believe that the recent changes are superficial and merely PR hype. They are real and deep expressions of the change of attitude and behaviour within those Departments. I pay tribute to the Departments because I hear so many business men speak of the way in which Department officials assist them and put forward ideas.
I reject the old-fashioned notion — it might be supported by Professor Patrick Minford, for example, although I must not misquote him as he has never said this to me—that a civil servant cannot be as heroic as a private business man. Civil servants are just as good as private business men. The fact that they work in the public sector does not matter. There are many entrepreneurial officials in the Department of Trade and Industry, and I warmly congratulate the Secretary of State on creating a Department that works positively for industry, rather than a bureaucracy that holds industry back. Perhaps that encapsulates the best of all the subtle changes of the past few years.
Unfortunately, the picture is not entirely rosy. The balance of payment figures represent a severe problem. I am very much concerned about our problem of low output. I chide the Government with reluctance and with my customary sadness for allowing their propaganda to skate over the awkward truth, I used to enjoy reading The Economist, which I regarded as essential reading, but I now regard it as an increasingly silly magazine, partly because it has started to pursue a particular line. That is a great mistake. The Financial Times is an excellent newspaper because it does not pursue a particular line.
Recently, The Economist contained an article whose theme was the comparison between the West German and British motor car industries. It referred to the doldrums in the German motor industry and the triumph of the British motor industry. I am delighted that the British motor industry is now experiencing an upswing and is going through a better phase. It has done much to improve itself, although it has some problems at present. The article stated that the total German output of private motor cars was 4.4 million, about two thirds of which were for export. But it conveniently left out the British output figure, which was about 1.7 million following the recent increase—it used to be about 1.4 million. Those figures may not be entirely accurate, but 1 hope that they are a near approximation.
To leave out that was absurd. Although Germany is, as we know, a high-cost, high-quality, high-reliability economy, it is manifestly the most successful, the premier capitalist economy of Europe. The hon. Member for Yeovil mentioned all the depredations that we have suffered, paricularly since 1980 and 1981. We were the only country that became recessionary in physical manufacturing output — the only one of the OECD-classified list of economies of our size of 50 million or 60 million—to suffer a backwardation in real manufactured output. The German economy is much bigger than ours. It is absurd to say that it is not as successful, and for the Government to concentrate on productivity increase figures that come from units of output per employee. That is misleading, unless the total output figures are also included.

Mr. Ashdown: I wonder whether the hon. Gentleman has noticed, as I have, that the Government go a stage


further in massaging the figures by always producing those that measure the position from the lowest point of the depression in 1981, rather than those from when they came to power in 1979, which would look entirely different. I understand that the total manufacturing output in Britain today is only a blip above its 1979 level.

Mr. Dykes: I think that it is more than a blip above. In the past six months, it has started to rise significantly. As the hon. Gentleman says, however, it is up for the first time.
I think that the Government would pursue a better line if they stopped avoiding the total output figures. Some people support the idea of the cathartic policy for the British economy; they feel that a rude shock was necessary. I do not agree. I believe that an advanced economy needs a blend of industrial manufacturing activities, as well as services and so forth. It is a great mistake for aspects of manufacturing industry to be wilfully neglected or allowed to be eliminated, just because of a decision to concentrate on such matters as computers and financial services. Be that as it may, development ought to come out of the many millions of decisions made in the open market. Obviously, some manufacturers went out of business against their will, and might have survived had they received the necessary support, which would have been forthcoming in other countries.
I do not wish to go on for too long, and I acknowledge the presence of my hon. Friends who are trying to contribute—

Mr. David Nicholson: Both my hon. Friend and the hon. Member for Yeovil (Mr. Ashdown) have said things which, if the debate had taken place about three years ago, would have received my strong support and assent. In my previous guise, before I came to the House, I helped to publish papers that were very critical of the decline in British manufacturing industry, and the contribution that it made to our national strength and balance of payments.
I would like to draw my hon. Friend out a little. He has touched only slightly on the dramatic improvement in our manufacturing output in the past three years, and I feel that he should pay tribute to that. The hon. Member for Yeovil, I fear, also ignored that point.

Mr. Dykes: Unfortunately, I do not have the index on me, but I think that it is only a couple of index points above the 1979 level, which was, I believe, 109.
I was making a comparative point. Other countries have had their recessions—a bit later, indeed—and, as their output was higher in any case, the effects were severe. But the effects were proportionately much more severe in this country, whose economy was already limited in its output. Perhaps my censure was not as severe as my hon. Friend imagines.
Germany, then, is the premier capitalist economy, with no fixation with ideological nostrums so abstruse as to be almost invisible to the naked eye. There is an idea here that everything in the private sector is wonderful and everything in the public sector is wrong. In Germany, some regard the public sector as something that should be limited and kept small; nevertheless, there is an attitude of co-operation between the two sectors that we seem to have lost in recent years. I feel that an excess of ideology—

rather than common sense, wisdom and a pragmatic observation of the scene—is guiding our business and economic practice.
Another problem is the complacency that still affects British management, despite the success that we have achieved. I pay tribute to the Government's attempts to overcome that, and, indeed, to my hon. Friend the Parliamentary Under-Secretary for the enormously important work that he personally has done.
I must declare an interest in retailing: I am involved as a non-executive director in a large retailing group. I do not exaggerate when I say—as I did in a debate last year―that we have frequently been on our knees pleading with British manufacturers to supply the products that we so urgently need for our customers. Sadly, however, we have ended up again and again having to obtain them from overseas suppliers. We are now encouraging the latter to invest here more and more, thank goodness.
The attitude of certain large corporations in this country — I shall mention no names — has often been very complacent. They have refused to supply the products that we need. I do not refer to the odd one-off example; it has happened far too frequently. We now have no large British-owned television set manufacturers. I suppose that Ferguson is an exception: it is owned by Thomson Brand, and perhaps a change of ownership does not matter. Incidentally, Thomson Brand is a nationalised company.

Mr. John Marshall: And it is European.

Mr. Dykes: Indeed it is. But, whatever the ownership, television sets, electronic products and so on have a history of decline. Government action is not the sole cause of that, although it may have been partly responsible. Manufacturing complacency, giving up and not bothering mean losing the market and any productive capacity.
After that cathartic period has been achieved, we need a much more open and pragmatic attitude. We need to get away from the ideology, and take common sense as a basis for our actions. We should accept the mixture of public and private sector, the need for them to work harmoniously together.
I do not wish to anticipate Monday's debate, which would be out of order. However, electricity privatisation is a case in point. I am not at all enthusiastic about the Government's plans; I state that quite openly. Parts of them are good, but has the proposal really been triggered by a genuine problem that needs tackling, or did the ideological motor start it off somewhere in the recesses of the Centre for Policy Studies—which itself should be privatised? [HON. MEMBERS: "It is."] I mean that it should be nationalised.

Mr. Austin Mitchell: It should be closed down.

Mr. Dykes: That would be a bit unfair. The Centre for Policy Studies has done some excellent work.
Did it all start with someone sitting in a cupboard, having food pushed through twice a day and being asked, "Are you ready with that memo on privatising the Army yet, George? You are late." Or did it begin in the Department of Energy, as a genuine modernising policy? I am simple-minded, and I cannot understand the idea of increasing electricity charges now so that they can be lowered later. I would not, therefore, have tackled the CEGB in the way that is proposed in the White Paper. The


problems of the electricity industry are hugely complex, and to comment so briefly on them will inevitably appear superficial. Surely, however, the main problem is at the distribution end, which the Government are leaving more or less intact; indeed, they are increasing its scope of activity.
Of the three segments of the industry, distribution surely provides the main problem of geographical monopoly. There is enormous complacency in its operations, including — I say this with heartfelt enthusiasm, as a retailer—the use of showrooms, which is monumentally inefficient in many respects. No wonder all the area boards are, according to the Government, so enthusiastic about electricity privatisation. Their geographical monopoly will remain intact and they will be able to secure generational activity at the margin and increase their work. As I understand it, those boards will collectively own the middle segment of the proposed privatised industry—the transmission company.
I believe that the problems of the electricity industry lie with distribution rather than generation. To tamper with an enormously successful, carefully built up, huge entity, the CEGB, so lightly — the White Paper is a short document for such a complex matter—is a pity.
If I were involved in deciding Government policy—obviously they would be acting much more wisely as a result — I should agree that they have done a lot of extremely successful privatisation. We are all aware that the main reason for privatisation has been to make the people shareholders and, as a member of the London stock exchange, how can I say that that is a bad idea? However, all Governments must discontinue certain policies after they have been a success—they cannot go on and on. I believe that, after the last privatisation, that should have been it. I hope that that attitude may be shown vis-à-vis the water companies. The problems of that industry will not be solved by the fairly simple approach that has been adopted by the Government to such a complex matter.
Enterprise is vital and I wholeheartedly commend the Government for having been the enterprise Government and the DTI for being, par excellence, the enterprise Department. However, such work must be tempered with social restraint and a sense of responsibility. Every sound business man would surely agree that there is no contradiction between the maximisation of profits and an acute social conscience and responsibility. They should plough back resources into the community not only through taxation, but as a result of autonomous action by companies and individuals — company directors and shareholders.
My contribution to the debate is somewhat paradoxical because I am talking against my own interests in the Bill that is second in the list for consideration later, the Planning Permission (Demolition of Houses) Bill. That Bill is an excellent representation of the ideas that I have sought to put forward. As a Conservative I naturally support property development and the beneficial positive aspects of such development. However, in the outer London suburbs we are witnessing rampant, excessive property development. Therefore, I am glad that many of my colleagues are present to support my Bill when it comes up for Second Reading.
Property developers must also recognise the need for restraint and recognise their social obligations not to overdo development. I would be out of order if I described my Bill in detail, but it provides that property developers

must apply for permission to demolish dwellings at the same time as they apply for planning permission to build a new block of houses or flats. The merits of such an approach would be obvious. The size of the file that I have with me demonstrates the number of letters of support that I have received. There is also tremendous support for the measure within the House.
My approach to my Bill is somewhat paradoxical because I have spoken in this debate and there are two other private Members' motions after this one. However, I have acted thus because it is rumoured that the Department of the Environment will, once again, object to my Bill. Recently I had a meeting with the Minister for Housing and Planning and he was as helpful as he could be. However, I would describe the Department's attitude as sympathetic, but unclear how to proceed. I believe that the Department of the Environment always prefers to change planning laws as a result of Government instruments rather than through Private Bills.

Mr. Deputy Speaker (Mr. Harold Walker): Order. The hon. Gentleman has been extremely ingenious, but I am sure he would recognise that he has gone far enough on that line.

Mr. Dykes: I thank you for your great patience, Mr. Deputy Speaker, and if the House gives me time to debate the Bill today I shall then go into more detail.

10.43 am Mr. David Shaw: May I apologise to the House because, owing to a long-standing constituency engagement, I may be unable to stay to hear the concluding speeches in the debate?
I believe that it is appropriate, given that today is the parliamentary eve of Monday's debate and certain journalists outside may be busy scribbling away, to say that there are some on the Conservative Benches who see opportunities and benefits to the nation as the result of the privatisation of electricity. My hon. Friend the Member for Harrow, East (Mr. Dykes) was correct to consider that privatisation in this debate. From other privatisations that have taken place, it is clear that quality control, design of the product and the financial control, management and discipline in those businesses have improved as a result. My hon. Friend has discussed whether the pursuit of privatisation is a good policy. It is clear that it has been successful and that current business practices contrast totally with the attitudes that prevailed in the 1960s and 1970s. During that time Britain's international position was falling rapidly.
I believe that the White Paper on enterprise is extremely important because it is a further step away from the attitudes of the 1960s and 1970s. Today things are completely different. An important contrast is that the White Paper is not about putting vast sums of money on the table, and it is not about vast grants to British industry. It is about encouraging support and improving skills within industry and business.
Reference has been made to manufacturing output and the fact that it is only just above the level reached in 1979. However, those people who say that forget that the service sector has expanded enormously. We now have a larger manufacturing industry than in 1979 plus a much larger service sector.
When one compares the current position to the 1970s, it is important to recognise that putting money on the table


was not the answer. In the 1970s money was grabbed by unsuccessful businesses and, as a result, those businesses were made more unsuccessful. They became less competitive as a result of receiving too much money to produce out-of-date and badly designed products.
The Government recognised that failure. Certainly, the famous "British disease" known throughout the world is now recognised as having been cured. Foreign competitors stand up when a British business man walks into the room because they recognise him as a true competitor. We had to change our attitudes and improve our skills in marketing, design and finance. If we had not done that, we would have lost out in competition to Japanese, German and American business men.
One of the best business lessons that I ever received occurred when I was flying back to this country across the Atlantic—I hasten to add on a British Airways plane—with a Japanese business man sitting next to me. Every time the conversation turned towards business, that business man discussed market share and how to increase it, the competitive position and how to compete more effectively and efficiently. I often contrast that conversation with the lessons that I had to learn when I visited various sectors of British industry in the 1970s. At that time I saw much old-fashioned industry and old-fashioned attitudes. In the 1960s and 1970s there was little understanding among middle management about international competition and increasing the market share.
The evidence of changed attitudes is demonstrated by a new sector that has developed, the British venture capital industry. The hon. Member for Yeovil (Mr. Ashdown) mentioned that industry and I share his concern that it is not as regional as we would like. It has been too concentrated on the south and the south-east. However, the business venture in which I was involved attempted to set up some operations in the north and the north-west. In a small and modest way, we managed to achieve one or two successes, but they were not as plentiful as we would have liked because we were trying to overcome in a matter of months attitudes that had been built up over many years. The regions lacked skills, training, investment and business knowledge, and there had been a loss of capital markets to London. Even the local professionals, the solicitors and the accountants were uncertain as to what venture capital was all about.
I am pleased to say that the British venture capital industry is admired by the United States for being competitive with their own industry. It is also admired by the Germans, the French and the Italians, all of whom want to copy our industry and develop their own venture capital industries. Certainly we have the opportunity for many new companies to start as a result of venture capital initiatives in Britain. I pay tribute to the work of the British Venture Capital Association.
One important aspect of the debate which I touched upon at the beginning of my speech is the British approach to business. In the 1960s and 1970s our attitude was totally wrong and we lost markets. In the Commonwealth countries and throughout Africa the British car industry has been in retreat and many foreign competitors' cars are now sold in those countries. We lost products, and we lost a television industry that is down to only about one company manufacturing in Britain apart from some Japanese companies now assembling over here.

Mr. Eric S. Heifer: Is the hon. Gentleman aware that we lost all those industries at the time when they were all privatised? The managements refused to get off their bottoms and get around the world and fight for markets, and allowed the television industry, the motor cycle industry—indeed industry after industry —to go to the wall. The Government tried to stop them going to the wall. The private enterprise people could have done what they wanted to do, but they did not and they failed the country.

Mr. Shaw: The hon. Gentleman did not listen to the point that I made earlier. My key point was that all those industries that failed during the late 1960s and the 1970s received vast amounts of Government money. The Government subsidised businesses that had failure within them. However much money one puts on the table, one cannot turn a business round when the work force does not want success. [Interruption.] Management—and I criticise British management—in the 1960s and 1970s did not understand the requirements of success. That was a very significant point. [Interruption.]

Mr. Deputy Speaker: Will the hon. Member for Bradford, South (Mr. Cryer) please contain himself? He has only just walked into the Chamber and has taken no part in the debate.

Mr. Shaw: Nevertheless, it is welcome that a few Opposition Members have turned up. During the debate on the coal industry the other day they were notable by their absence.
Not only did Britain lose products and opportunities; it lost new products. It lost the opportunity to develop the video equipment industry, and many new areas of business. There were problems with both the management and the work force. In some British companies there were five or six canteens. I used to go round some of those companies and compare them with the American subsidiaries operating in Britain which had only one canteen and in which the management were on the shop floor. The management were interested in what was going on. There was a complete contrast in attitudes between British companies and American subsidiaries operating over here. Fortunately, however, much of that is changing.
We now do not have management and work force problems to the same degree, except when they are raised by Opposition Members. We have staff and personnel problems because management is beginning to recognise, and has recognised for some time, that management and work force in Britain have the same objective — to produce more goods.
It is important that in this interesting debate we recognise that throughout Britain there is a lack of training. The Government have done quite a lot to encourage training in business. However, we still have problems which are highlighted by Mr. Robb Wilmot, former chief executive of ICL, who pointed out that one Korean company has more management graduates in it than there are in the whole of the United Kingdom. That means that we do not have the management skills or the background of management training that we need. I know that the Government will do much to develop that.
I should like to pay tribute to my hon. Friend the Under-Secretary of State for Industry and Consumer Affairs who has advocated the cause of British industry, and improvements in design and quality control. I am


pleased that my right hon. Friend the Prime Minister has joined us. It is only appropriate that I should say that one of my friends recently attended a conference where my hon. Friend the Minister was speaking. He said to me, "Who is this man Butcher? The Government should wheel him out more often as he is a really good speaker."
In clothing design and other industries, Britain excels. At one time I acted as financial adviser to one business lady in the design sector. She constantly said to me that she had never been trained at design school to understand business, but she built up a business that employs some 50 people. We can imagine how large that business could have been if she had been trained in business skills.
I conclude by drawing attention to the fact that the Government are encouraging the improvement of design manufacturing skills. Productivity has increased rapidly. The Government, through the enterprise initiative White Paper, will help further to develop the quality and marketing skills of British industry. We have come a long way since the problems of the 1970s. We have proved that it is not vast sums of money being put on the table in investment grants that improve British industry. We have proved that it is improved by the right economy, by reducing taxation, by encouraging our business men to succeed and by being more competitive against foreign competitors.
All those skills that we are encouraging and all the improvements that we are trying to achieve in British industry are no good unless British industry earns profits. Opposition Members fail to understand the importance of profits. Profits are important because today's profits, this year's profits, provide the cash for next year's investment, and investment in plant and machinery is extremely important for the country. Without more investment in plant and machinery, we cannot succeed and we cannot compete against overseas companies.
I hope that the Government will continue doing what they have done to date so that there will be more improvement and investment in the people who are important in British industry and in new plant and equipment. I know that we will continue to achieve new production records as a result of the Government's initiatives.

Mr. David Evans: This morning, I have been under a misapprehension. We have heard about the electricity authority and about national and multinational companies. I should like to bring the debate back to the enterprise initiative.
I welcome the regional grant system being taken over by the Government's initiative. I hope that the initiative will be developed by the regions. Design is important. British Aerospace, which is in my constituency, is well-equipped in respect of design. That is why I hope that the proposed negotiations between the Rover Group and British Aerospace are successful. Design is important in business.
I should like to bring the debate back to the small business man. The country's future depends on him. The small business man needs the help that the initiative will provide.

It being Eleven o'clock, MR. SPEAKER interrupted proceedings, pursuant to Standing Order No. 11 (Friday sittings).

NATO Summit (Brussels)

The Prime Minister (Mrs. Margaret Thatcher): With permission, Mr. Speaker, I shall make a statement about the meeting of Heads of State and Government of the North Atlantic Treaty Organisation—[Interruption.]

Mr. Speaker: Order. Let us get off to a good start with the statement.

The Prime Minister: With permission I shall make a statement about the meeting of Heads of State and Government of the North Atlantic Treaty Organisation, held in Brussels on 2 and 3 March, which I attended with my right hon. and learned Friend the Foreign and Commonwealth Secretary.
The summit agreed a main declaration and a statement entitled "Conventional Arms Control: The Way Ahead". Copies of both documents have been placed in the Library of the House.
Since NATO's last summit in 1982, there have been important changes affecting the Alliance. First, we have seen developments in the arms control field, above all the successful INF agreement, achieved as a result of NATO's resolve.
Secondly, we look forward to President Reagan's forthcoming visit to Moscow and hope that — then or later — we shall see agreement to reduce the strategic nuclear weapons of the United States and the Soviet Union by 50 per cent.
Thirdly, we have seen bold reforms introduced by Mr. Gorbachev in the Soviet Union. These hold out the prospect of more responsibility and more choice for the Soviet people.
Fourthly, we have begun to see some signs of change in the Soviet Union's external policies, above all the very welcome decision to withdraw from Afghanistan.
At the same time, there has been no let-up in the Soviet Union's extensive military modernisation programmes. Indeed, they are going ahead as fast as ever. For example, first, by the mid-1990s, virtually the entire Soviet strategic force in place in the mid-1980s will have been replaced by new or modernised systems, including the world's only rail-mobile ICBM system. Secondly, one new submarine is deployed every 37 days. Thirdly, they are actively modernising their shorter-range missiles, where they already enjoy a major advantage, with more accurate longer-range SS2Is. Fourthly, the Soviet Union made over 90 space launches last year for military purposes.
As a result, the Soviet Union has the world's largest nuclear and chemical arsenals, and the Warsaw pact enjoys substantial superiority over NATO in conventional forces.
Against this background, it was important for the leaders of the NATO countries to come together, take stock and to set guidelines for future action. The United Kingdom approached the meeting with a number of clear objectives. First, to underline the continuing importance of the NATO Alliance to the defence of the West. It is as vital now for protecting our freedom as when it was formed in 1949. Second, to confirm the unity and the resolve of NATO in the face of Soviet attempts to separate Europe from the United States and to denuclearise Europe. Third, to reaffirm the validity of NATO's strategy of flexible response and the consequent need to keep all NATO's weapons—nuclear as well as conventional—up


to date. Fourth to discuss President Reagan's forthcoming visit to Moscow for a United States-Soviet summit, and to confirm NATO's priorities in arms control.
These objectives were very fully and satisfactorily achieved, as will be clear from the texts of the declaration and the statement to which I have referred. They contain: first, a strong reaffirmation of the vital link between the security of Europe and that of North America. It is particularly important to remind people of this in a presidential election year in the United States. President Reagan assured the summit that NATO enjoyed a bipartisan support in the United States and that American troops would remain in Europe as long as the common defence of the democratic way of life required. We are all, of course, very grateful to the United States and Canada for the susbtantial forces which they keep in Europe.
Second, in the two documents we reaffirmed our determination that NATO's defences should remain strong, recognising the crucial role of the nuclear deterrence provided not just by the United States strategic deterrent but also by the presence of effective and up-to-date nuclear weapons in Europe. I am particularly pleased that all Heads of Government agreed on
a strategy of deterrence based on an appropriate mix of adequate and effective nuclear and conventional forces which will continue to be kept up to date where necessary".

Third, based on confidence in our sure defence, a willingness to seek dialogue with the countries of the Warsaw pact and a desire for further arms control agreements, particularly on chemical and conventional weapons. Any further reductions in nuclear weapons after START would come about only in conjunction with the establishment of conventional balance and the global elimination of chemical weapons. It is quite clear that NATO is determined to avoid a third nuclear zero.
Heads of Government also took the opportunity to thank Lord Carrington, who retires in June, for his outstanding work as Secretary-General of NATO.
This summit meeting, which was convened as a result of a British initiative, successfully reinforced NATO's basic message of defence, deterrence and dialogue. It reaffirmed the strategy that has kept the peace in Europe for over 40 years. It underlined NATO's commitment to keep all our weapons, both conventional and nuclear, up-to-date in order to ensure that deterrence remains effective and that our defences are strong enough to convince any aggressor that he could not prevail. It is on the basis of such a sure defence that we are able to welcome the reforms that are taking place in the Soviet Union and to enter into further negotiations to reduce the level of weaponry on both sides.
Taken with the recent successful European summit, we have created a platform from which Europe can look with confidence to the future.

Mr. Neil Kinnock: I am grateful to the Prime Minister for her statement.
Is it not a fact that the statement that we heard this Friday morning is evidence of the Prime Minister's success in having the summit and of her failure to get what she wanted out of it? Is it not also clear that, in the week before she met allies in Brussels, Chancellor Helmut Kohl had already concluded the summit during his visit to Washington by agreeing not to press for the third zero on tactical weapons in return for the United States'

reassurance that nuclear modernisation would receive no priority? Therefore, is it not obvious that the Prime Minister was effectively sidelined by the manoeuvre before she even got to Brussels?
Yesterday the Prime Minister said that the conclusion of the summit was that conventional weapons had to be brought down to parity and chemical weapons eliminated before any further negotiations on nuclear weapons took place. Was the Prime Minister reflecting the position of our allies? The communiqué states that the NATO disarmament goal includes,
in conjunction with the establishment of a conventional balance, the global elimination of chemical weapons, tangible and verifiable reductions of American and Soviet land-based nuclear missile systems of shorter range, leading to equal ceilings".
Therefore, was not Lord Carrington more accurate than the Prime Minister? He said:
nobody is saying that you cannot start one set of negotiations before another has ended.
Is it not the case that the West German Government take the view that negotiations to reduce battlefield and short-range nuclear weapons on their soil should be commenced as soon as possible and that separate and simultaneous negotiations can proceed without waiting for the completion of one agreement before others are pursued?
There has been a certain amount of semantic anarchy between our various allies since the summit ended. As words are actions in communiqués like that — [Interruption.] I suppose I made the mistake of quoting The Wall Street Journal on that issue. As words are actions in communiqués such as those coming out of Brussels, are the Parliaments and forces of allied nations to act upon the objective of keeping forces maintained in proper condition where that is desirable, which is the German version, kept up-to-date where necessary, which is the English version, or, as the Prime Minister says that that version is a euphemism for modernisation, should modernisation, as she interprets it, be the objective? Could she tell us whether, in her view, the act of modernisation should include the installation of new weapons systems, whether sea, air or ground launched, and whether they are regarded as being tactical, intermediate or strategic in range?
The Prime Minister says that she strongly favours the bold changes in the Soviet Union, both for the sake of the Soviet people and to increase international stability, and one cannot but concur with her there. But does she not realise that the pressures that she wishes to impose by the rearmament that would come from the form of modernisation that she wants would insert the greatest possible impediment to the changes that we all want to see in the Soviet Union?
The Prime Minister has previously spoken of the continual renovation and innovation in Soviet arms, and she did so again this morning. Is she aware that she can stop and reverse such a build up by fostering agreements which secure arms build down? However, is it not clear that she wants to pursue the contrary course and, under the guise of modernisation, bring about a multiplication of armaments? Therefore, does she not appreciate that, to put it at its most polite, there is a significant inconsistency in her approach?
There is much justifiable concern about the numerical superiority of Warsaw pact forces in Europe, and a clear need rigorously to pursue the asymmetrical reductions in conventional forces offered by the Soviets and considered


by our allies. However, does the Prime Minister share the view of many experts, including the United States chiefs of staff report to Congress last year, that the imbalance of forces, if considered in terms of quality as well as in terms of quantity, is less in reality than is sometimes argued by many, including the Prime Minister? If she does, will she be pursuing force reductions on that basis rather than on the basis of what is sometimes called the "bean count" view of force disparities between the Soviet Union and the Western allies?

The Prime Minister: I sat for nearly two days in the NATO summit listening to many speeches, including many from Socialist Heads of Government, and I never heard such claptrap as I have heard from the Opposition Front Bench today. This country's Socialist party is out of step with every other one in Europe. That is no wonder, because it is virtually a CND Socialist party.
The Government got precisely what we wanted out of the summit in modernising nuclear forces, and that was endorsed by 16 nations, including the United States. Many of those countries supported us, and others agreed with the communiqué — [Interruption.] Yes, because some countries neither make nor deploy nuclear weapons, but they support the rest of us in doing so, unlike the Labour party.
There was a clear declaration in the conventional statement that we have to continue to keep conventional weapons up to date, and we thought it absolutely right that we should put it also in the bigger declaration, which says:
This is a strategy of deterrence based upon an appropriate mix of adequate and effective nuclear and conventional forces which will continue to be kept up to date where necessary.
The right hon. Gentleman has difficulty with that sentence, he might try the next one for size. The first sentence of paragraph 6 says:
While seeking security and stability at lower levels of armaments, we are determined to sustain the requisite efforts to ensure the continued viablity, credibility and effectiveness of our conventional and nuclear forces, including the nuclear forces in Europe, which together provide the guarantee of our common security.
How does the right hon. Gentleman think that one can possibily do that without keeping nuclear forces in Europe up to date? That is precisely what this NATO summit agreed. The right hon. Gentleman is out of step with each and every country in NATO.
The Soviet Union is, as I said, and as we all know, continuing to modernise all its weapons, whether conventional or nuclear. I set out some of the changes this morning, and there are many more. It is absolutely vital that we negotiate from a basis of strength because that tactic got the intermediate nuclear weapons treaty. It is because of that continued strength that we are able to deter. One does not deter with obsolete weapons, whether conventional or nuclear, and one has to keep them up to date.
The right hon. Gentleman referred to the American chiefs of staff. General Galvin needed the decision which we were instrumental in getting. America was prominent in supporting us all the way in securing this form of wording. The actual text was negotiated in English, so it is English which is the clear version.

Sir Antony Buck: Does my right hon. Friend agree that there are two most encouraging features about this summit? The first is the total

reaffirmation of the American position, and its commitment to NATO as the sheet anchor of NATO. The second important feature that is emerging is the improved relationship between France and NATO. Many of us would like France to return to being a fully integrated member of NATO but realise that that is not likely. Nevertheless, it is good that there has been a closing of relationships and so much interservice co-operation.

The Prime Minister: Yes, the total reaffirmation of American forces to Europe was welcome, particularly during an election year in the United States. I agree with my hon. and learned Friend that another encouraging factor was the presence of President Mitterrand and the way in which France is, voluntarily because it does not belong to the integrated military structure of NATO, exercising its forces, bearing in mind the NATO exercises. I put several proposals to President Mitterrand regarding, for example, being able to practise reinforcements through French Channel ports and airfields of any forces that would be needed, should there ever be an alert. So far, we have not been able to practise through those Channel ports, and I hope that we should be able to. Again, that is evidence of further close co-operation between French forces and the NATO structure.

Mr. Paddy Ashdown: Will the Prime Minister recognise how welcome it is that wiser heads in NATO have forced her away from unilateralism in seeking to raise the number of nuclear weapons? Since both the Warsaw pact and NATO have the capacity to destroy each other 50 times over, why does she want more? Is not enough enough?

The Prime Minister: As vie know from the last election, only one party in this country is willing to keep a sure defence and to deter an aggressor. The Soviet Union is modernising her nuclear weapons. She has, for example, the only strategic ballistic missile which can be moved around by rail, and, as we know, can be brought into areas that are being vacated by the SS20s. We do not expect the hon. Gentleman and his party to be strong — they do not have a policy.
We are determined to keep defence and deterrent sure. That means modernising nuclear weapons. Ministers when they meet in their next nuclear planning group meeting, which takes place in April, will have to make decisions. They have on their agenda a proposal to make deployments in connection with the pulling out of Europe of the intermediate nuclear weapons.
Is the hon. Gentleman aware that Marshals Yazov and Akhromeyev are already saying that they will have to take this matter into account and compensating moves will have to be made? Marshal Akhromeyev said that in the ratification hearings for the intermediate treaty. We have the guts to keep this country properly defended, and so does NATO.

Mr. David Howell: Will my right hon. Friend accept that the outcome of the Brussels meeting is sensible, realistic and greatly reassuring to the future peace of Europe? However, is she satisfied about the verification regime which will be needed for the proposed strategic missile negotiations? Will it be the same regime as the one that is in place for the INF treaty, or does she think that a much deeper and more comprehensive verification regime will be needed for the START negotiations?

The Prime Minister: My right hon. Friend is correct. A much deeper and more detailed regime is necessary for the START proposals than for the intermediate nuclear forces. The intermediate nuclear forces regime became easier when the Soviet Union agreed to a global ban, whereas my right hon. Friend is aware that at first it was proposed that the Soviet Union and the United States should each keep 100. That would have been almost impossible to verify. It will be much more difficult with START than with a global ban because there will be a mix of weapons. The establishment of a proper verification procedure is one of the reasons why it is taking a considerable time to get a START agreement. We think that it is more important to get the right and sure agreement than it is to get one quickly.

Mr. Michael Foot: Does not the Prime Minister appreciate that many other countries apart from those represented in NATO are greatly interested in nuclear and other forms of disarmament? Does she not understand that her perpetual, indeed paranoid, insistence on building up nuclear weapons is a barefaced breach of Britain's commitments under the non-proliferation treaty? How does she imagine that we will get other countries to abide by that treaty? Dos she propose to tear it up? If she continues to say that we must have nuclear weapons, many other countries will say the same.

The Prime Minister: First, the Soviet Union probably has more nuclear warheads than any other country. Secondly, the right hon. Gentleman went to the root of the communiqué because he does not believe that nuclear weapons are necessary for deterrence. The communiqué clearly says that nuclear weapons alone give the requisite degree of deterrence to the enemy. The right hon. Gentleman does not agree. Thirdly, this was agreed by the whole of NATO. Fourthly, the first nuclear arms control agreement that reduced the number of nuclear weapons was achieved under a Conservative Government through firm resolve and strength and by deploying cruise missiles. We played a big part in that. We were the first to deploy the cruise missiles and the Labour party would never have done that. We would never have had an agreement and the Russians would still have all their SS20s up. Had a Labour Government been in power there would have been no similar weapons on the Western side. We had a great influence over that agreement, and the Opposition do not like the fact that it was strength that achieved proper and balanced arms reductions.

Mr. Michael Mates: I congratulate my right hon. Friend on her robust leadership of the NATO nations. It has been confirmed within NATO that the twin-track policy that we have been following is the correct one—a policy of firm deterrence while seeking reductions. Will she now take every step that she and her Ministers can to explain to the people of Britain, who do not understand some of the nuances and who will be concerned at the thought of upgrading nuclear weapons, that modernisation and bringing up to date is not rearmament or escalation but simply the maintenance of that deterrent shield without which we would not have obtained any of the concessions that we have got from the Soviet Union?

The Prime Minister: I totally agree with my hon. Friend. We have to make certain that we have a sure

defence and that the deterrence deters. To do that, weapons must be up to date. Then we must have dialogue on arms control agreements. That is what we are doing, and in those arms control agreements we are making certain that at no stage do they unbalance our defence effort or call it into question.
The Opposition policy of no nuclear weapons was defeated very surely in a phone-in during the general election campaign—(Interruption.]

Mr. Speaker: Order. The Prime Minister must be given a chance to answer.

The Prime Minister: During that phone-in, Lance Corporal Ragman questioned the Labour spokesman on defence about Labour's non-nuclear policy. He said:
Now you're telling me to go into this battle knowing that if we do succeed in pushing them back"—
that is the enemy—
we're gonna get nuked and if we don't succeed in pushing them back we're gonna get invaded.

Dr. David Owen: The Prime Minister knows that the SDP has consistently supported the updating of Britain's nuclear deterrent and NATO's nuclear deterrent. What is more, it will continue to do so. Does the Prime Minister agree that there are many in NATO who think that some categories of battlefield nuclear weapons could be completely removed with advantage to both sides? I am speaking especially of very short-range battlefield nuclear weapons such as nuclear artillery. However, aircraft will continue to need to be nuclear armed. Can the Prime Minister say whether she would consider a battlefield nuclear-free corridor as a confidence building measure while at the same time going ahead with a stand-off air-launched missile for the Tornado aircraft?

The Prime Minister: I know that the right hon. Gentleman has consistently supported the updating of nuclear weapons, except for Polaris, which he did not seem to agree should be updated. I know that he is not associated with the new party, and I notice that it does not have a policy. In its document that party says:
The new party will, therefore, need to decide how to reconcile these changing realities with the manifesto commitment to 'maintain our capability in the sense of freezing our capacity at a level no greater than that of the Polaris system'.
If the party has a policy, it seems to be not to modernise in order to deter but to freeze in order to be obsolete compared with the threat that faces us.
The right hon. Gentleman asked about battlefield nuclear weapons. He will be aware that since the Montebello decision the number taken out of the field in Europe has been considerable. He will also be aware that the artillery shells are being updated. That decision was taken and is in process of being implemented.

Mr. Harry Cohen: Is the Prime Minister aware that the last opinion poll on this matter showed that 75 per cent. of the British people think that further increases and improvements in nuclear weapons would not bring any real advantage or benefit to the United States or the Soviet Union? Why is the Prime Minister pursuing such a hard line in this costly and unproductive nuclear rearmament? Is it not the case that her policy of rearmament, of wanting to turn Britain into a nuclear battle station, was not put to the electorate at the last election?

The Prime Minister: The hon. Gentleman forgets that we have an arms control agreement that reduces intermediate land-based nuclear weapons to zero, and that we are going for a START agreement between the United States and the Soviet Union to reduce the strategic ballistic missiles of the two nations to 50 per cent. Such a reduction of weapons was never achieved under the defence policy of the Labour party when it was in power and certainly would not be achieved now if it was in power.
In an article in The Daily Telegraph of 3 November the Labour Chief Whip was reported as saying:
We have over 100 members of the Parliamentary CND in the Parliamentary Labour Party, including of course the Leader of the Party, Neil Kinnock.
Therefore, Labour party policy is to have no nuclear weapons at all. That is no deterrent.

Mr. John Wilkinson: May I express my appreciation to my right hon. Friend for the fact that this communiqué presents starkly to the peoples of the Alliance the fact that under Gorbachev, as under his predecessors, the steady modernisation and enhancement of Soviet military power has proceeded apace? In the face of that reality, is it not completely irresponsible for the Labour party to advocate modernisation and improvement of neither our conventional forces nor our nuclear forces?

The Prime Minister: I agree with my hon. Friend. Most people in this country expect us to have a sure defence and know that that requires a nuclear deterrent. That was reaffirmed by NATO this week, which said in the communiqué:
Only the nuclear element can confront a potential aggressor with an unacceptable risk. Therefore, for the foreseeable future deterrence will continue to require an adequate mix of nuclear as well as conventional forces.
Governments of all sorts in Europe, including Socialist Governments, fully endorsed that communiqué. The Labour party is totally out of step with every other Government in Europe, including Socialist Governments, as well as with the United States.

Mr. Michael Alison: Does my right hon. Friend recall St. Augustine's observation that memory is the stomach of the mind? The fact that the Labour party has no stomach for maintaining a proper balance in our
effective defence, including a nuclear balance, is merely a reflection of the fact that it has no memory of the holocaust that followed pre-war appeasement and one-sided military weakness.

The Prime Minister: My hon. Friend is absolutely correct: no memory, no stomach, no spine, no guts.

Mr. Peter Shore: Although I welcome the progress made towards multilateral nuclear disarmament through the INF treaty and the START talks, and although I accept that the emphasis must now be on rectifying the conventional imbalance in Western Europe, does the Prime Minister believe that it is possible to make much progress towards reductions of conventional weapons in Europe without embarking upon parallel negotiations to limit and reduce the number of battlefield nuclear weapons in the European theatre?
The Prime Minister stated her strong objection to the third zero, as she called it. What can be the objection to

the achievement of such a goal if—but only if—we have reached agreement with the Soviet Union to reduce its overwhelming supremacy in conventional weapons?

The Prime Minister: As the right hon. Gentleman is aware, a third nuclear zero in Europe would unbalance the forces, which is why we do not wish to enter that sort of negotiation now. That is why the communiqué talks about doing this "in conjunction with" a conventional balance and the elimination of chemical weapons. Most of us believe that it can be done only when that is complete. Chancellor Kohl accepts that there should be no third nuclear zero in Europe, so he is absolutely with us.
The phrase in the communiqué,
in conjunction with … a conventional balance and the global elimination of chemical weapons",
came from the ministerial communiqué at Reykjavik, and has come forward into this communiqué. Most, indeed, all of us agree that the next priority is an asymmetrical reduction in conventional weapons because the Soviet union has such a great superiority and, if possible, a global ban on chemical weapons, although the verification problems would be enormous.

Sir Anthony Meyer: My right hon. Friend must be warmly congratulated on the major role that she played in securing an agreement in which no one got exactly what he wanted and everyone got much more than he expected. Does she accept that the presence of President Mitterrand at the meeting suggested the possibility of closer Franco-British co-operation, which might lead to closer co-operation in defence equipment procurement and manufacture and, in due course, to closer consultation about the use of our independent nuclear deterrent?

The Prime Minister: I agree that it was very good that President Mitterrand was present at the nuclear summit. He is a staunch believer in nuclear deterrence, and France is updating its nuclear weapons. We have had a good deal of bilateral discussion with France, trying all the time to get greater practical co-operation between the military forces of France and the military forces of NATO. That seems to be forthcoming. Although France will not rejoin NATO, it will, nevertheless, co-operate closely with its conventional and possibly its nuclear forces, although the latter would be much more difficult.

Mr. Tam Dalyell: Why does the Prime Minister suppose that she was unable to persuade even the Americans to support us on Exercise Fire Focus? Secondly, did she have any discussions with Chancellor Kohl or Secretary Shultz about the case of Christina Endrigkeit, which undermines the whole basis on which the Libyan bombing took place? Why is it that the evidence of Major Ruth La Fontaine, the acting officer in charge in Berlin, contradicts what the British and the American Governments said?

The Prime Minister: I am happy to tell the hon. Gentleman that Libya was not discussed at this NATO summit, not even in bilateral talks between the United States and ourselves. I note that the hon. Gentleman has no complaint about the NATO communiqué, for which I am grateful.

Mr. John Browne: Does my right hon. Friend accept that, unlike the Labour party, many millions—if not hundreds of millions—of people throughout the free world thank her for rejuvenating NATO and urging


our NATO allies to concentrate upon not merely the words of the Soviet Union but the actions of the Soviet Union projected into the long term? Does she accept that arms control must be balanced, integrated in terms of nuclear, chemical and conventional and, above all, prudent? As for the funding of NATO, does she accept that vast alternative sources of funds are available if only NATO would co-ordinate its procurement programme effectively?

The Prime Minister: I agree with my hon. Friend. It was a vigorous communiqué by a vigorous NATO carrying into the future the strategy that has kept the peace in Europe for 40 years. Next year, NATO will celebrate 40 years of existence. The communiqué stands for everything that the Labour party rejects.

Ms. Joan Ruddock: What precisely does the Prime Minister mean by "necessary modernisation"? Does it include replacing free-fall bombs on Tornado with cruise missiles? Does it include extending the range of the Lance missile? Does it include the so-called updating of the field artillery? How does she think the latter will be received in West Germany, where the people bitterly resent being told that they should be the firebreak for Europe? If she believes that the modernisation of Soviet short-range missiles is undesirable, how does she think all this updating and modernisation will help? It is substitution, it goes against the spirit of the present disarmament agreements and it cannot be in the interests of our people.

The Prime Minister: The communiqué recognised that we cannot deter with outdated weapons, whether conventional or nuclear. The Soviet Union knows that, which is why it is already updating its short-range as well as its longer-range weapons. Indeed, it is ahead of us in updating some long-range weapons
Since the INF agreement was signed, the Soviet Defence Minister, Mr. Yazov, has said:
We shall exert all efforts to make the military alliance of Socialist countries, the Warsaw Pact organisation, even more powerful,
In the ratification hearings before the Supreme Soviet, Marshal Akhromeyev has said that the Soviet Union
has other nuclear weapons in the European area which to a certain extent compensate for these
INF
missiles.
That is the threat which we have to deter. I think that peace is extremely important. We shall continue to have peace only if we continue the strategy of NATO, which is to have nuclear weapons and to update them. If our free-fall nuclear bombs are absolutely incapable of delivery, there is no point in thinking that they would deter. Yes, in due course it will be necessary to update them.

Mr. Hugh Dykes: Will my right hon. Friend dismiss with total derision the shambling defence policy strictures of the Opposition, which are pure Mickey Mouse with a couple of bullets in the pocket? In accepting the congratulations of the House on her successful participation in the summit, will my right hon. Friend say a little more about the interesting partial French return to NATO, despite what she said about them not being members of it, and that, with British encouragement, they can overcome their inhibitions about the United States

aspect of the policy? Will my right hon. Friend particularly say whether the French have now begun to reconcile themselves on the shorter-range missiles with the German inhibitions about the presence and location of the French missiles?

The Prime Minister: I think that there is no possibility of our French friends returning to the military structure of NATO. They were present as part of the political structure of the Western Alliance. I think that there is no possibility at present of their returning to the military structure. They are always extremely helpful in their approach to nuclear weapons. They know full well that there is no deterrence without them. They know full well that one must keep them modern and up to date. They are doing that with their own long range weapons, and they are in fact modernising their own short range. I believe that the fact that a Socialist President of France is taking such a strong view has had a very strong effect on Socialists also in West Germany, and has been helpful to the NATO Alliance as a whole.

Mr. Nigel Spearing: While, at times, fear and deterrence are necessary, in this case through NATO, does not the Prime Minister agree that sure defence—the phrase that she used—and abiding security and stability are obtained only through knowledge that leads to that elusive political commodity, justified confidence?
In that respect, has not the United Kingdom two incomparable assets? First, we are the cultural and institutional centre of a language that is now a major world language — English. Secondly, we have through history, endowment and performance a major world news agency, the BBC World Service, which serves the ends that I have just described. Cannot the £3 million that is now necessary for a world television service be made available, particularly bearing in mind the fact that it is the cost of about 20 modern war planes? Does not that make only good sense in our contribution to confidence, which alone separates us from nuclear holocaust and, from the Prime Minister's point of view, is very good value for money? Should not the government therefore invest in that news service that we all want to see?

The Prime Minister: Sometimes it seems to me that we need to aim more knowledge and more facts towards the Opposition to achieve their agreement to a NATO comuniqué. So far, the BBC does not seem to have been able to do that. Yes, the BBC external services are broadcast in many countries. The hon. Gentleman is aware that the Independent Television News already has an international television service, which does not cost the taxpayer a penny.

Mr. Alistair Burt: Has my right hon. Friend considered that her sadly realistic view that conventional warfare will be deterred only by nuclear weapons will strike a chord not only in our own constituencies, but throughout the length and breadth of Europe in working men's clubs, and particularly in the Soviet Union, where the Soviets' experience of invasion by conventional warfare was so horrific during the second world war? Does not my right hon. Friend feel that opinions engendered by such an experience and such a memory are likely to be worth a few more beans than the vacuous opinions expressed by Opposition Members?

The Prime Minister: Yes, I have always found that in this country people understand, because memories are still vivid, that one must have a strong defence. They understand that one needs nuclear weapons for defence. The Army—all our armed forces—understands that this Government at least would never put our young men in the field inadequately equipped and with equipment that was not sufficient to deter the threat. That was their worry in the piece that I read out. Therefore, they support the policy, and the people generally support the policy. They would prefer us to have a sound defence. They know that it is necessary and they have a certain amount of pride in the part that this country plays as a staunch ally in NATO, and also more worldwide even than NATO.

Mr. Eric S. Heifer: In view of the statement that the Prime Minister has just made about the BBC, is she aware that many of us are absolutely delighted that she has come back from the NATO summit without getting entirely her own way? It is about time that the nations of the world decided that Mrs. Thatcher does not run everything. If she did, we should be involved in a nuclear war in no time.
Is the right hon. Lady further aware that she speaks with two voices? On the one hand, she says how delighted she is to work with Mr. Gorbachev and, on the other hand, she does everything possible to strengthen the military forces in the Soviet Union that want to undermine Mr. Gorbachev and are in fact undermining Mr. Gorbachev. Is it not clear that the Russians want to get rid of nuclear weapons over a period, to carry out the reforms that Mr. Gorbachev wants, and she more than anyone else in the Western world, even more than Reagan, is undermining those efforts?

The Prime Minister: It will come as no surprise to the hon. Gentleman to hear that I disagree with him. Perhaps he can say where one did not get the British way in NATO. One did. It was our job. We fought to get the modernisation in. There was no debate about whether or not nuclear forces needed to be modernised. Everyone accepted that they did. In the ministerial groups and the high-level groups, everyone accepts that they do. They make provision for future action. The only question was whether we said that in the communiqué. I believed in being open in the communiqué and, supported and backed by many others, we agreed that not only should we modernise our nuclear forces, but that we should say so in the communiqué. That is clear. There is no doubt about it. Everyone knows that we have to do it. It was what we said in the communiqué. I hope that the hon. Gentleman thinks that it was right to be open-minded.
We welcome the reforms in the Soviet Union. I have said many times that it is only on the basis of a sure defence and a sure deterrence that we can encourage openly the reforms that are taking place. We know that it is not easy. If they fell apart, if trouble is caused in the satellite countries, or if the Soviets return to a much more Stalinist figure, we know that, whatever happens, our defence continues to be sure because we take the necessary decisions in time. The hon. Gentleman will know that the lead times for modern equipment are very long, and one mistake now in refusing to make decisions could undermine the defence of the whole country. That is our fully consistent position.

Mr. William Cash: Does my right hon. Friend agree that we speak with one voice, and that that voice is for unity and security in Europe and the rest of the world? Does she agree also that the Opposition speak with one voice in matters relating to disarmament, and that that is a voice of surrender and sellout? Does she further agree that the results of this summit will do an enormous amount to enhance respect for this country in the world as a result of her efforts in initiating it and carrying it through?

The Prime Minister: Yes, I agree. Conservative Members speak with one voice: that we should have a sure defence and deterrence. We are always ready to enter dialogue on effective arms control agreements. I agree with my hon. Friend that the Opposition speak with one voice. The Leader of the Opposition used that voice clearly when he spoke, during the election campaign, of using all the resources that one has to make any occupation completely untenable.

Several Hon. Members: rose—

Mr. Speaker: Order. I must have regard for the fact that this is private Members' time. I shall allow questions to continue until noon and then we must move on.

Mr. Paul Boateng: The Prime Minister was free with her advice to Mr. Gorbachev as to how he might deal with dissidents in his Politburo — and she should know. Was she so free with her advice to her protagonist, Chancellor Kohl, as to how to deal with elements in his Cabinet and country who, under no circumstances, will accept one of her modernised Lance missiles, or any other missiles, on West German territory?

The Prime Minister: Chancellor Kohl has been one of the staunchest members of NATO. It was he who agreed to deploy cruise and Pershing missiles. We deployed cruise first; West Germany was second. Those were new nuclear weapons that were necessary to deter the Soviet Union. It was necessary to demonstrate our strength, and Chancellor Kohl was the second to deploy. West Germany has also taken modernised nuclear artillery shells, so the hon. Gentleman is completely wrong.
How do I give Chancellor Kohl advice? I say that I do not believe in coalition Governments — Liberals are weak everywhere.

Mr. Richard Holt: Despite the mental meanderings of the Opposition, there is overwhelming evidence to show that the people of this country have not forgotten the lessons of the inter-war years. The memory has not been dulled that war came about because of weakness, not strength. My right hon. Friend's statement today will be welcomed throughout the country, particularly in the north of England, because we can now look forward to the modernisation of our defence programme. I hope that this will not be the last time that my right hon. Friend comes to the Dispatch Box to say that we shall remain strong in this country.
Bearing in mind all the work that my right hon. Friend must do, may I ask her to reflect for a few moments on the BBC before doling out more money to it, and look at the play that it put on this week, which was a travesty of justice for NATO and the defence of the western world?

The Prime Minister: It is six years since we have had this sort of NATO summit of Heads of State and Government taking stock and considering guidelines for future action. It was therefore vital that we secured the agreement


publicly that nuclear forces must be modernised as necessary. The detailed decisions, as my hon. Friend knows, are taken in the ministerial nuclear planning group, which meets in April. It will first have to consider any dispositions consequent upon the intermediate nuclear forces agreement, and, later, which weapons should be updated as necessary. My hon. Friend is aware that the lead times are long, which is why we had to get the guidelines clear for Ministers who take these detailed decisions. However, it is clear from the NATO communiqué that our defence will continue to be sure; so will our deterrence, and all members of NATO agree with that conclusion.

Mr. Jeremy Corbyn: Does the Prime Minister accept that anyone looking objectively at what she has done this week would conclude that she has gone completely mad? The world is racked by debt, hunger and poverty. The National Health Service is collapsing in her own country for lack of funding, and she goes to a NATO Council of Ministers with the deliberate intention of scuppering the possibility of a future disarmament treaty with the Soviet Union by agreeing to upgrade and spend a great deal of money on nuclear weapons. Does she not think it is time to stop increasing expenditure on nuclear weapons and to start spending money on the vital social needs of this country and the rest of the world? Is it not time seriously to promote disarmament, on which the Soviet Union is clearly keen, even if she and her friends in Europe are not?

The Prime Minister: Sixteen NATO Heads of Government and Heads of State agreed this effective statement. Of course, I do not expect the hon. Gentleman to like it. He does not agree with NATO or nuclear deterrence. He does not, therefore, agree with deterrence. One gets disarmament agreements only by negotiating from strength, in detail and toughly. One can then be very certain that there is verification. Those agreements will stick. When one agreement is completed, we move to another knowing that defence is sure and that the treaties that have been signed will stick and be honoured meticulously. Therefore, the intermediate nuclear agreement was reached and the United States and the Soviet Union move on to the START agreement, which I believe will be made. The hon. Gentleman wants arms control agreements and they are happening under this Government and other NATO Governments because we have acted from strength.

Mr. David Wilshire: Does my right hon. Friend agree that the Opposition, in trying to destroy our defences, overlooked one key political fact — that, despite being willing to give up some nuclear weapons, the Warsaw pact countries still show no sign of giving up their Communist creed or their desire to spread their revolution wherever they can?

The Prime Minister: Of course, it is part of the Communist creed that it should be extended by one means or another the world over. That has been part of the Communist creed from the beginning. That is why we watch their actions throughout the world very carefully. The Communist creed is spread by military might, by subversion or by proxy. At the moment there are hopeful

signs, and we welcome the decision to withdraw from Afghanistan. We have been demanding that withdrawal for a long time. That withdrawal is welcome and we will watch its implementation carefully. We also note that more world aid is provided by NATO countries than by Communist countries.

Mr. Bob Cryer: Is not the Prime Minister's obsession with nuclear weapons undermining the United Nations nuclear non-proliferation treaty signed by 133 nations stating that they will not have nuclear weapons manufactured or deployed on their territory? Is not her obsession also undermining the INF agreement, which she claims that she had something to do with—and that is not true—because many nations will believe that she is cheating on that agreement because of the increase in nuclear weapons? Will she consider an alternative other than the threat of mass extermination if she thinks that the Russsians are coming? Why will she not commit suicide if she is frightened of the Russians and allow the rest of us to continue to negotiate with Mr. Gorbachev, who she called "that boldly courageous leader"?

The Prime Minister: No. Disarmament was hoped for after the last world war and the West began to disarm. Shortly afterwards, the Berlin airlift occurred, and we will all remember that. As was said at the NATO summit, we did not choose to make the Soviet Union an enemy; the Soviet Union chose to be one. NATO was formed after the Berlin airlift and after the Soviet Union chose to embark on a heavy programme of rearmament. That NATO agreement and the action following it have kept the peace in Europe for 40 years and enabled us to continue to produce this kind of statement and debate in the House. The hon. Gentleman is the first to take advantage of that but the last to defend the means that achieved it.

Mr. John Bowis: Does my right hon. Friend agree that we did not reach today's negotiating table by dangling obsolete weaponry before the Soviet policy makers? Does she also agree that the people in this country who seek genuine peace and security will be more reassured by this Government's policies than by the Labour party's policies which at best will leave our defence capabilities rusting in the cupboard, and at worst will abolish them tomorrow, and, according to the Leader of the Opposition, will involve us "taking to the hills"?

The Prime Minister: Obsolete weapons do not deter. Conventional weapons alone do not deter, and two world wars in Europe have already proved that. We want a war-free Europe, and we need to keep nuclear weapons to achieve that.

Mr. John Fraser: Was the Prime Minister implying in her earlier replies that Chancellor Kohl is enthusiastic about the immediate deployment of modernised Lance missiles on German soil?

The Prime Minister: No, Sir, I said modernised artillery weapons. They have already been modernised. A decision has yet to be made about Lance. That will be one of the decisions. It is a United States weapon; it will have to be designed. The point about making the present decision is that we will be prepared as necessary to make decisions to deploy modernised nuclear weapons.

Mr. Graham Riddick: Can my right hon. Friend give the House more details of how NATO is to


persuade the Soviet Union to eliminate its massive stockpile of chemical weapons? Does she not agree that the process has been made much more difficult by Britain's decision in the 1950s unilaterally to get rid of its chemical weapons? Does she not think that there is a lesson to be learnt from that in relation to nuclear weapons?

The Prime Minister: Yes; my hon. Friend is right. I have frequently said that Opposition Members should really criticise the Soviet Union for not following our example in unilaterally getting rid of chemical weapons. It proves that unilateral disarmament is useless. One's opponent merely increases his stockpile and modernises and updates his weapons. I think that a change of view came about in the Soviet Union when the United States, which has only a very small stockpile of older chemical weapons, decided to go ahead with work that would update that stockpile if necessary. It was following that decision that the Soviet Union changed its mind about wanting to negotiate a global plan for the reduction of chemical weapons. Again, we have to watch verification because these weapons are very easy to make and therefore very difficult to verify.

Mr. Speaker: We now return to the debate on the enterprise initiative.

Mr. Dennis Skinner: rose—

Mr. Speaker: Will the hon. Gentleman please resume his seat?

Enterprise Initiative

Question again proposed.

Mr. David Evans: I take this opportunity to congratulate my right hon. Friend the Prime Minister on her success in the NATO discussions and to say how much I agree with everything that she said.
The enterprise initiative is about small businesses. The small business man has an idea, and he knows perfectly well what he wants to do with that idea but unfortunately it sometimes takes a long time to develop the idea successfully. The initiative will help the small business man in that respect. I like to think that, through his ingenuity and entrepreneurialism, the small business man will find ways to develop his business—even when bureaucracy, local authorities and property owners seem to stand in his way at every turn. Bankers need security. They need all sorts of assurances if they are to help the very small business to develop. Nevertheless, in my experience the small business man usually manages to get the business off the ground one way or another.
I was glad to see from the White Paper that there will be more regional offices to help the small business man whose business has become a reasonable success. To begin with, small business men do not understand what a business plan is or even what cash flow is. They find that out by overtrading and suddenly finding that they need the bank manager's help yet again. That is why I welcome the regional offices. There comes a time, after the business has eventually got itself off the ground, when it needs to take on further responsibilities — in terms of management, expertise, new premises, products, capital investment or banking facilities. Enterprise counselling could greatly benefit the business that is just about to expand beyond all that its owners originally dreamt of. Most business men start by wanting to run a small business, and only in the development of that business do they begin to realise their potential and ability.
I welcome the consultancy process, but, contrary to what has been said, I have not met many civil servants or Government officers with entrepreneurial flair. My experience is the reverse. Unless they are carefully chosen and are prepared to be trained, we may find that we have a typical bank manager type who will deter the entrepreneur from developing his business if it is not copper bottomed, instead of helping him. Can those counsellors who are supposed to direct up and coming entrepreneurs be trained, monitored and reported on yearly or two-yearly?
When a civil servant decides that an entrepreneur can attract capital and the proper quality of staff, it is time for consultancy. Consultants are not what one expects them to be. Indeed, the first consultant I met I quickly headhunted into my business, and I am not the only one to have done that. If one goes through the boards of multinational companies one finds that their members often start as a consultant to the business. Will the Government reconsider carefully the most important step of helping a small business to become an international company which contributes to employment?
When a small business grows into a big business the business man has to decide whether to attract outside capital into it. That can be a frightening process. Again, a counsellor or consultant could help the business to


become a public company. The hon. Member for Yeovil (Mr. Ashdown) said that yuppies were earning £120,000 a year. I am not worried about that. I hope that they earn £120,000 a year, not £20,000. I hope that some of those whom I am talking about become yuppies. I am keen that we should have many millionaires and I do not believe that the public are fooled by yuppies earning £120,000. The public who have invested in BP and so on are sound and intelligent. They have made a long-term investment. They are not worried whether the shares go up and down; they are interested in the dividend, whether the company is making profits and providing employment, and whether they can leave their shares to their grandchildren. I refute what was said about the public being gullible; they are not.
The enterprise initiative will help enormously businesses which need capital and need to plug into the opportunities of the EEC, the European Investment Bank and merchant banks. Businesses do not know how to become public companies. They need independent advice, not from bankers and solicitors but from an independent consultant whom they can trust. That is important for their growth.
The next important stage concerns design. Products need to be designed attractively. In the past some of the goods produced in this kingdom have not attracted people, but now there is a tremendous improvement in the design of all the products on the shelf. If we do not design products and fix prices properly, Japan and other countries will continue to attract our buying public. After all, it is up to the public to decide what they want and do not want. Therefore, I welcome this initiative on design because design, manufacturing and selling are at one.
I like to believe that we are now a nation of house owners and of shareholders. I should like us to be known not as a nation of shopkeepers but as a nation of small and medium-sized businesses, because they underlie the prosperity of this kingdom.

Mr. Chris Butler: I very much welcome the enterprise initiative and its thrust towards further deregulation of our economy. It is an excellent move. However, I wonder whether it will affect the book trade. I have had several complaints from constituents about the possible imposition of VAT on books. The kind of thing that they say to me is, "Isn't that a tax on something special? Wouldn't it penalise schools and libraries and be a tax on knowledge?" To a large extent, I agree with them.
However, behind those criticisms, I believe that there is an impulse from the book trade itself, which is being rather hypocritical because of the existence of the net book agreement. Through the procedures of that agreement, which is probably the sole remaining instance of resale price maintenance, books have a price greater than the market would bear. Schools, libraries and ordinary people suffer because they are paying higher prices for books than they should. I hope that the Government will consider that distortion of the free market in their enterprise initiative.
I welcome the proposals that teachers should have experience of business world. In the House, we try to achieve the same objective—at least some of us do—through the Industry and Parliament Trust. We go out

from these green Benches into the real world outside. I am not asking somebody else to do what I would not be prepared to do myself.
I regret that in the election not all teachers voted Conservative. When I was canvassing, some who were against us harangued me on the doorstep. It was rather like being back in school and being told off for being naughty. It struck me that that may be something to do with the fact that teachers go to school, then to teacher training college or perhaps to university, and then back to school, so they are thoroughly imbued in the school culture, rather than in the culture of the world outside schools and universities. I hope that through the enterprise initiative teachers will gain greater experience of the wider world, just as we do through the Industry and Parliament Trust.
I noted the words of my hon. Friend the Member for Welwyn Hatfield (Mr. Evans) on the qualifications of counsellors and whether they would have had enough experience of the real world. I should be surprised if they were civil servants. They should be people who have been in business or marketing. Interestingly, although when I was special adviser to the Minister for the Civil Service I was very much in favour of increasing the secondment of civil servants to the world outside, I nevertheless believe that counsellors should come from the business world.
I am glad to report the success of enterprise in the north-west. As one local paper put it:
The march toward Warrington/Runcorn by North American companies goes on … There are now some 75 North American companies in Warrington/Runcorn".
That is an example of the confidence that the United States has in our economy and in our continuing membership of the European Community.
In October last year the Warrington Guardian reported the intention of Enterprize North West to:
build upon the area's booming business success".
Mr. Andre Winter of 3i said
Warrington really does seem to be thriving and we are giving new and established companies the opportunity to grow further … People in the area certainly seem special".

I certainly agree with that. He said:
They have entrepreneurial spirit and the ability to start up new businesses.
In January, the Warrington Midweek Guardian reported that
Booming Warrington New Town continues to break records for attracting new companies … Half year statistics show that 120 companies signed leases to move into Warrington sites, bringing 1,042 jobs.
I have never met Eileen Bilton who is very much associated with the advertising for Warrington new town, but she certainly weaves some magic for the area. The general manager of the new town commented that Warrington-Runcorn was meeting
greater success than ever before. We are particularly pleased at the number of jobs created and the high percentage of expansions.
In February, the Warrington Guardian reported an investment of £43 million in the town, bringing a further 1,500 jobs. The president of the Manchester chamber of commerce and industry, Mr. Lester George, said that the
North-West had talked itself into despair and it was only recently that the region had recognised its economic strength … The North-West is poised for expansion and nothing will stop it … The only question is whether business will be permitted to grow to its maximum capability.
I draw great inspiration from that new-found confidence in the north-west. The north-west has realised


that retailing stories of doom and gloom will not increase takings. It has also realised that the difference between north and south is not a handicap, but an advantage. After all, in the past, it was enterprise that threw up the great cities of Liverpool and Manchester and beat the south-east into a cocked hat. I am sure that it could do so again. We even have some yuppies in Altrincham.
I think that Mr. George's question whether the northwest would be permitted to go up to its maximum capacity was a sage question. We are already meeting problems of the availability and mobility of skills. In Manchester, surveys show that a quarter of all manufacturers and those in service industries lack skilled labour and find it hard to recruit. That shows the importance of training for jobs and of the enterprise initiative.
I hope that the enterprise initiative will push hard against bureaucracy, as it promises. I know that we have abolished 500 quangos and reduced the number of Government forms to the height of Big Ben, but, small business men, repeatedly tell me that there are still too many chiefs and not enough Indians in our bureaucracy, and that there is still too much red tape.
I have been contacted by a company called Econoloft, which is the largest loft installation company in the United Kingdom. Sadly, it has met the kind of obstructionism about which I am complaining. Its success has been built upon its product of space-saver stairs, which provide access to lofts that would not be possible through the use of traditional stairs. The company has gone through a lengthy process of obtaining 40 determinations from the Department of the Environment on its safety and specifications and has had personal ratification from the Secretary of State for the Environment. However, because of some quirk of the law, individual building control officers can still take objection to that product and say that, in their opinion — only their opinion appears to count—the specifications conflict with the 1985 building regulations.
Some local authorities now have the bit between their teeth and have engaged in criminal prosecutions of that company with all the bad publicity that attaches to such a criminal prosecution. For example, there was a prosecution in Chippenham. I am glad to say that it was dismissed, but, undeterred after the case was heard, the local authority in Saffron Walden has now given notice to the company that it intends to prosecute it for its product. That is expensive, vexatious, time-consuming and harassing for a company that is ambitious to do its best for itself, its region and the United Kingdom. If given its head, it could install its own manufacturing capability for the space-saver stairs, and bring extra employment to the region.
It is precisely that kind of nonsense that the enterprise initiative should snuff out, and I hope that my hon. Friend the Minister will consider the matter with despatch.
Whether the north-west will be permitted to develop to its full capacity will also depend to some extent on what happens in the run-up to, and after the winding-up of Warrington-Runcorn new town. I hope that the Government will take a flexible approach to the receipts of the new town prior to its wind-up, and that those receipts will not simply disappear into the maw of the Exchequer. Those assets are considerable, and are being realised with some despatch. I hope that some of them will be reinvested, so that the industrial parks in the north-west

can be completed. That would chime in well with the Government's general policy of building in incentives for all.

Mr. James Cran: I am bound to say that it is extremely difficult to refocus the mind on the subject that we are supposed to be debating—not only because this has been an unusually exciting morning, but because an hon. Member's spirits do not exactly lift when he rises to speak surrounded by serried ranks of empty Benches. Nevertheless, I am not deterred.

Mr. Butler: Labour Members made a big fuss earlier this week about an article in The Guardian by Andrew Rawnsley, which accused them of being either drunk, incompetent or lazy. Yet only one of them is here today.

Mr. Cran: My hon. Friend has made an eloquent point, to which I do not think I need add. The facts speak for themselves.
I am an enthusiast for the enterprise initiative. I say that having had considerable dealings with the Department of Trade and Industry for some years. In the years before this Government and the White Paper of which the enterprise initiative is part, all that we had from the DTI was interventionism of one sort or another. We looked at certain sectors and decided how they could be improved. We spent £20 billion for 20 years on regional policy, and in the end I do not believe that any of us received the value for money that we wanted.
That is why I consider the White Paper quite revolutionary. This is the first time that I can remember that the DTI has been so strongly associated with the word that was used by my hon. Friend the Member for Welwyn Hatfield (Mr. Evans)—entrepreneurship. I am delighted at that, because I well remember trying to tell the CBI a few years ago that it should sponsor a crusade for entrepreneurship. I believe that this was the way to strengthen the regions of the United Kingdom, make more successful the businesses that were already there, and, indeed, to encourage more new businesses.
I could not interest the CBI in that proposition, for reasons that I need not go into here. In addition, the hon. Member for Yeovil (Mr. Ashdown), who is no longer in his place, spent a long time telling us that the practice of past Governments was right, and that we needed a formalised industrial strategy. What he did not tell us was that it is clear from consulting the business community, the CBI and the Association of British Chambers of Commerce that not a man jack of them wants that sort of industrial strategy.
What the business community wants and what it has got from the Government are the conditions in which it can take the marketing and strategic and other decisions necessary to decide the future of its businesses. I was disappointed that the hon. Member for Yeovil did not give a balanced picture and admit chat there are many people who do not want his concept of an industrial strategy. What we want—it is on offer in the White Paper—is the encouragement of enterprise.
Before the Government were elected to office one began to wonder whether the spark of enterprise had been extinguished from the British public. I almost believed that it had, but, my goodness, look at what has happened in the past 10 years. One can hardly believe that such a transformation was possible.
In the 1950s and 1960s many talented youngsters were not prepared to go into industry and business. I well remember conducting a survey with some sixth formers at the beginning of my career in industry. I asked them whether they would go into business and industry and whether, in due course, they would form their own businesses. I will never forget that 80 per cent. of them said that they were not prepared to go into business and industry, but wanted a nice, easy, cushy number in the Civil Service, the professions or whatever. The reasons for their choice were simple. They regarded employment in industry as dirty, not well paid and, more important, uncertain.
Against this background I congratulate the Government because they have wrought a cultural revolution in the outlook of youngsters and others in this country. The hon. Member for Yeovil did not mention that this revolution is reflected in the fact that since 1980 some 180,000 net new businesses have been established. That is an enormous achievement in comparison to the past.
No doubt some hon. Members would argue that such new businesses are all in the south-east, but that is seen not to be the case if one checks the record. Between 1984 and 1986, 20,000 new businesses were set up in the north of England. Therefore it is clear that this Government's approach is the correct way to proceed because we will not solve the problems of the regions by drafting in unwilling companies by way of regional policy. We will rejuvenate the regions by the "bottom up" approach, by encouraging existing businesses and encouraging people to establish new businesses.
I am aware that the Minister is not complacent about encouraging business. However, when one makes international comparisons—he and I appreciate that there are difficulties with such comparisons—it is clear that the Netherlands has four times our number of small businesses, France and Japan twice that number, and the United States and Germany one and a half times that number. Therefore, we have a fair way to go to make up the leeway, but that is not the Government's fault—it is the fault of previous Governments. I believe that the philosophy contained in the enterprise initiative will go a long way to enable us to catch up with those countries.
My hon. Friend the Member for Welwyn, Hatfield asked how the Government can encourage business. I believe that few previous Governments have known how to encourage business. Let us consider the problem of deregulation. We are all aware that business men resent having to comply with the onerous requirements that the Government and others place upon them. We are aware that the Government are unable to abolish all such requirements completely, but they must reduce them. Therefore, I was delighted to learn from the White Paper—tucked away in one or two lines—that we will receive a deregulation White Paper some time in the summer. That is first-class news, but, for goodness sake, let it not be a recitation of what the Government have already done.
I pay tribute to the Government for what they have done, but I want to see a radical approach in that White Paper. I wish that I had time to outline my proposals, but I must press on
The White Paper on deregulation states:

All new proposals for requirements on business are examined".

Obviously, that is to ensure that compliance requirements are minimised. That seems to be first-class. The document continues:
Gradually,"—
that is a word that always worries me—
all existing requirements are being examined in the same way.
Full marks to the Government for starting the process of gradually examining existing requirements. The problem is that all the difficulties stem from those existing requirements. Therefore, can the Minister tell us how gradually is "gradually" and whether he has a time frame within which the Government expect to go through existing legislation. We are all waiting with bated breath.
The White Paper also states:
The system of assessing the compliance costs … is being further developed and departments are being encouraged"—
another word which worries me—
to identify more targets for regulatory reform.
That approach is absolutely right. There is no doubt about that. However, that is passive language. Will the Minister and the Government tell us what it means? The Government's heart is in the right place, but will they move quickly enough? That is what the small business community wants to know.
Another aspect of the White Paper which appends to the initiative is the transfer of technology and co-operative research. We all agree that that is vital. When I represented the CBI — to make it clear to the hon. Member for Great Grimsby (Mr. Mitchell) that I am not ashamed of that — I was always amazed at the unwillingness of many companies — not all companies fall into that category — to innovate. That seems extraordinary because the future of industry is that it should innovate.
I was also worried about the unwillingness of many companies to spend on research and development. Many companies preferred to go to the Government cap in hand, saying that they would spend on research and development if the Government would pay part of the cost. That was excusable when industrial profits were at low levels, but that could not be said now when industrial profits are at the highest levels for many years.
Therefore, this atrocious situation, whereby United Kingdom industrially-funded research and development is lower than that of most of our competitors, should be reversed. That really has to be rectified. The onus is not on the Government; it is on the industrial community to be rather more aggressive. I welcome the innovation proposals. The mere stating of a solution — and it is stated most eloquently in the White Paper — is one thing; it is quite another to implement it.
In this regard I remember spending a lot of time trying to get industry and industrialists to go to universities so that the latter could tell the former what they had to offer. I can assure the very few hon. Members who are present that it was an uphill business. I could get them along only if I could say that there was money on the table. I could not simply say that they should go along and see how much they could get out of universities in terms of technological developments that occur in universities and elsewhere. At some point I should like to hear from the Minister what details he has to catalyse industry to make use of the enormous residue of facilities in universities and polytechnics. We must not forget polytechnics. In the


country at large there are a number of first-class polytechnics that companies should also look to for advice and guidance.
Moving on to the core of what was said by my hon. Friend the Member for Carshalton and Wallington (Mr. Forman), I should like to talk about the enterprise initiative itself. I have enormous respect for small business men. Even though politicians stand for election every five years, we do not take the same risks. Small business men mortgage everything. Some even second mortgage their homes. The companies that they establish do not, however, have strength and depth. That is why the approach that is set out in the White Paper is correct. If a company has no spare resources, it is the Government's role to ask, "How can we help a small and, in some cases, weak business to transform itself into a stronger business that, in 20 or 30 years, may employ many people?" That is why the White Paper is correct.
We should recognise that many companies worry about consultants. They always consider that they are too costly and that, in any case, once they are let in through the front door, one cannot get them out through the back door. The approach of the White Paper will assuage such fears. The Government have generously contributed £50 million to fund the scheme. Some may say that they are not generous, but it should be noted that the Government are prepared to make more funds available in the following two years. Such funds will be welcomed and used by business men who recognise that, these days, the market place is extremely complex and is becoming more complex.
I was slightly worried when I read the section relating to design, marketing, and so on, because I did not see the word "communications". That surprised me. I have no doubt that that does not mean that it is not the Government's intention to encourage communications but rather that the document was written by somebody with a more academic approach than we have. Design is not academic or abstract. It means communicating with customers to ascertain what the customers want. That was not clear in the document. The same applies to marketing. Marketing is not just a sales force; it is a whole company, from top to bottom, being orientated towards selling what it produces. That means upward and downward communication. I hope that, when the initiative gets off the ground, this point will be understood.
In the past few years, my hon. Friend the Minister has played a great part in encouraging industry's awareness of the need for better quality. He knows more about quality than I do, but he and I know that it is not just a matter of computer-aided design and manufacturing but of management communicating with the work force. If one is building a car, one does not just shove on an ill-fitting component so that one can get another unit out of one's factory. Therefore, there is a tremendous need for communication at all levels within British industry.
The enterprise initiative is a solid, revolutionary concept, but many other things are needed to make it work. For example, it is much easier than it was, but it is still difficult for a small or growing business to get finance, particularly loan and equity finance between £50,000 and £100,000. The hon. Member for Yeovil correctly said that there is a shortage of patient money—that is, having to wait five years for one's return. The trouble is, however, that the hon. Gentleman was long on analyses of and short on solutions to the problems. That was fairly typical of the approach that we had from the Opposition Benches. One

solution is the formation of local investment companies, which would take in equity and make long-term loans. My right hon. Friend the Chancellor of the Exchequer is not listening today, and may not even read on Monday what I am saying. Therefore, I might have to write to him about this. That said, I am reminded that my hon. Friend the member for Carshalton and Wallington is parliamentary private secretary to my right hon. Friend the Chancellor of the Exchequer, so perhaps I can rely on him to tell my right hon. Friend what is required. In fact, what is needed to make the idea possible are fiscal incentives for investors in local investment companies.
Taxation is always an irritant�ževen to Members of Parliament—but it will always be with us. However, an increase in the threshold of corporation tax to £250,000 would be welcomed by the small and middle-sized business community.
Another great problem is inheritance tax. If there were more than one Opposition Member present, there would no doubt be a great hue and cry about my suggestion that there should be 100 per cent. relief for business assets. Far too many business men who build up a business over many years then find that it is taxed from under them, and that is quite wrong.
I congratulate the Government on a first-class document.

Mr. Hugo Summerson: I begin by apologising to the House and to my hon. Friend the Minister because I shall not be able to stay for the winding-up speeches, as I have a constituency engagement this afternoon.
Property is the basic raw material for trade, commerce and industry. In Victorian times and during the industrial revolution, no obstacles were put in people's way by, for example, planning laws. When that great man, Brunel, was laying out the Great Western Railway, he did not have to trot off to his local council offices and apply for planning permission to build Paddington station. He did not have to deal with inspectors and all the majestic panoply of Government interference. He got on his horse—not on his bike; I do not think they were around then—and went out and surveyed the line of the Great Western Railway himself. Those were the days of great enterprise and initiative.

Mr. Austin Mitchell: And slums.

Mr. Summerson: I remind the hon. Gentleman that it was Conservatives who brought in the Factories Acts.
Our people have not lost enterprise and initiative. We remain an innovative, resourceful and inventive people but, to a great extent, that is being stifled by red tape. Today, we have to labour under the town and country planning legislation. The first such Act passed in 1948, and since that date, those responsible for administering the legislation have worked out a jargon all their own, as I know from my experience. They give such reasons for refusing applications as, "There is a certain rhythm about the roof scale along this stretch of London road and this should not be disturbed" or, "Such an item would not be a welcome addition to the street scene." I do not know where they get this jargon from—perhaps they learn it at planning school—but it is of no help to the small business man who is trying to expand his factory.
I congratulate the Government on revising the use classes order. This is excellent, but I urge them to go further. They have not really started. I can give another example of obstructionism — that by local authorities. To this day, 43 years after the second world war ended, there are still empty bomb sites in our cities. There is such an empty site only 100 yd from where I live, and such sites can be found in many parts of our great cities. The one near my home was owned by the Greater London council.
Those of us who take an interest in property matters are keeping a careful eye on property auction catalogues. In those we see properties that were formerly owned by the GLC being sold at auction. In many instances the leases on those properties expired years ago. The rents being paid today are at levels that obtained 10, 15 or 20 years ago. Many properties owned by local authorities should be given over for use by business. However, many local authorities do not even know what properties they own. They have no idea and are not interested.
In my area, the London borough of Waltham Forest is controlled by Labour and the council imposed a 62 per cent. rate increase last year and decided to set up an economic development unit. How very helpful to local businesses to know that they can go and discuss that 62 per cent. rate increase with friendly officials at the town hall!
Page 31 of the White Paper says under the heading "Inner Cities":
The identification of Urban Programme Areas for particular help is a new policy for DTI and recognises the particular difficulties of such areas. A number of inner cities will similarly benefit from the new measures for Development Areas as well as Regional Selective Assistance. DTI is also responsible for coordinating the work of the City Action Teams in major cities and running 16 Inner City Task Forces.
That is greatly welcomed. I urge my hon. Friends in the Department of Trade and Industry to confer with the Department of the Environment so that we may have some co-operation between those two Departments. It is fine for the DTI to bring forward this sort of programme. However, obstruction by the local authorities that rule in inner city areas will tend to cancel the benefits of such programmes. We must make full use of all the resources in our inner cities.

Mr. Austin Mitchell: What about people?

Mr. Summerson: We must also make full use of people, but, as I have said, people need places in which to work. If some local authorities deny businesses the right to use certain areas and buildings, those people have nowhere to work and will go elsewhere. In its turn, that will put more pressure on rural areas.
I urge the DTI and the D o E to get together and overhaul the planning system. I am sure that hon. Members will have seen the report from the Audit Commission. That sets out local authority property holdings and what little use is made of them. That matter needs to be looked at urgently. Enterprise initiative cannot flourish if it is denied the premises that it needs. It is all very well to talk about trade and industry and about initiative and enterprise, but people need places in which to work and I urge my hon. Friend the Minister to look at that.

Mr. David Nicholson: My first pleasant task is to congratulate my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) on his success in the ballot, his choice of subject and the vigorous way in which he put his case. This is the second time in three weeks that I have attended a debate on a motion introduced by a Conservative Member during which the Opposition Benches have been almost empty, save for the token presence of the hon. Member for Great Grimsby (Mr. Mitchell). We all sympathise with him in his lonely vigil.

Mr. Austin Mitchell: The hon. Gentleman probably realises that, on Fridays, Labour Members go to their constituents and attend to the disastrous consequences of the Government's economic policies.

Mr. Nicholson: Conservative Members, too, have constituents to look after.
I was interested to hear the speech of my hon. Friend the Member for Walthamstow (Mr. Summerson) and his reflections on the planning system, although I do not necessarily follow him to all his logical conclusions. I have just returned from a parliamentary delegation visit to Saudi Arabia, where planning regulations are somewhat in their infancy. What impressed me, especially in the capital city of Riyadh, which is not in the most delightful of spots—it is in the middle of a desert plateau—was the dignity and splendour of modern buildings that have been put up during the past five years.
It is relevant to our debate on enterprise that we should not consider such matters simply in terms of utilitarian financial incentives. Especially in the inner cities, an immense amount depends on environmental considerations and the type of buildings, public or private, that are erected. Indeed, for the past 10 years, Saudi Arabia has been working on a new industrial city on the shores of the Gulf at Dubai. It is a most impressive achievement.
I contrast those achievements with Britain where we have planning laws to an excess, the Department of the Environment building at No. 2 Marsham street — that great tribute to architectural splendour.
It is a pleasure to take part in a debate with my next door neighbour, the hon. Member for Yeovil (Mr. Ashdown). My sorrow at his flitting from the scene must be counterbalanced by the fact that I shall have to leave in three quarters of an hour and will be unable to hear the hon. Member for Great Grimsby and my hon. Friend the Minister.
The hon. Member for Yeovil made an interesting point about venture capital in the regions, and I hope that it will be picked up, if not in this debate, in the Government's approach to such matters. I do not question the statistics that he mentioned, but my impression is that we are beginning to get substantial new life in the regions, especially in the west midlands and my native north-west, which suffered greatly in the recession. As my hon. Friend the Member for Beverley (Mr. Cran) said, new businesses are being created in the north-east at a rate of 6,000 a year and the number of businesses setting up under the enterprise allowance scheme has increased by an average of 30 per cent. each year since 1983.
Manchester is now the second biggest financial centre outside London, with more than 50 banks located in the city. Last year, Japanese, German and Australian banks


set up in Manchester. In the west midlands, which has suffered greatly from the industrial recession, tourism contributes more than £500 million to the economy. Since 1976, employment in that industry has increased threefold to 70,000. One might not think of the west midlands as a typical tourist area, so that is an achievement.
I had some sympathy with the hon. Member for Yeovil when he warned about the new publicity mechanism and the semi-change of name of the Department diverting attention away from its essential tasks. We should not dwell too much on enterprise and lose our essential concern with the rather more mundane matters of trade and industry. The Department of Trade and Industry, or whatever it is called, will be judged by how it assists, encourages and facilitates British industry to export and to regenerate our domestic market.
I inject a note of soberness into our discussion. The latest balance of payments figures from the DTI show, in 1986, a deficit on visible manufactures of £5,307 million, rising in 1987 to £6,542 million. The non-oil visible trade deficit rose from £12,519 million in 1986 to £13,809 million in 1987. Those are large, disturbing figures. The trend, while not savagely upwards, is still upwards. Those are deficits. We must be concerned with those figures.
I mentioned that I have recently returned from Saudi Arabia. Many of the conclusions that I reached on that visit would be the subject of a foreign affairs debate. We visited British expatriates and the embassy's trade offices there. We got the message from those who live, trade and work out there that not enough British companies were showing an interest in that extremely rich market, despite the fall of oil revenue. Saudi Arabia is trying, understandably, to diversify its economy. It is looking for partners in the industrialised world to help in that.
British companies are doing a certain amount, but we were told that more could be done. They wished that more companies would come out—that more smaller and medium-sized businesses would show an interest. They contrasted that with the success of French companies, for example. The point was also made that British companies and perhaps some British expatriates needed to improve their ability to deal with the Arab market. That is an important task for the DTI.
Everyone, including Opposition Members, took them view that Britain has an immense opportunity in a country such as Saudi Arabia at the moment. Last September an offset programme to the substantial Tornado sales from Britain to Saudi Arabia was concluded. That gives British firms a considerable opportunity for joint ventures.
There is another reason why Britain has an immense opportunity in Saudi Arabia. We took on board the impatience of many Saudis with the United States. For many decades, Saudi Arabia has had a close political and economic partnership with the United States, but the people were considerably affronted by the restriction that the United States placed some years ago on the sales of spare parts to aircraft that it had supplied. There was concern in the United States that those planes could be used in Israel. That affront was felt by all the people whom we visited. They are frustrated with the United States' policy on the west bank and the Israeli conflict. They look to what Britain can achieve. That is a matter for a foreign affairs debate, but be not surprised, it gives considerable export opportunities, which can benefit us.
One way in which the DTI can help is mentioned in the White Paper, which states in paragraph 9:

One possibility is to make more use of Chambers of Commerce and other regional bodies to deliver services to exporters where they can offer a network of contacts which is close to small and medium-sized businesses with the potential to export.
Perhaps I should declare an interest because I am a parliamentary consultant to the British chambers of commerce. They are discussing with the DTI the use of chambers of commerce to identify firms in the £1 million to £10 million turnover bracket, which could export more but do not, and to help to lead them to the point of entry in export markets.
Moving away from the export side of the discussion, that paragraph in the White Paper went on:
One other possibility is to use outside agencies such as Local Enterprise Agencies, Chambers of Commerce and firms of management consultants to provide an information and signposting service for the business development initiatives. The advantage of operating in this way would be to extend the range of DTI contacts with industry at a relatively small cost and to use wider networks of contacts with small and medium-sized businesses than is possible even through the extended Regional Office network.
My hon. Friend the Member for Welwyn Hatfield (Mr. Evans) welcomed the extension of DTI offices but said that it was important that there should be an entrepreneurial flavour to them. I hope that by using the premises and personnel of chambers of commerce and local enterprise agencies the entrepreneurial element will come in. I am happy to say that a number of chambers of commerce are involved in housing DTI personnel. They include Norwich, south-east Hampshire, Coventry—the Minister will be pleased to hear that; I am sure he played a major part in achieving it — north Staffordshire, Sheffield, central and west Lancashire, Chesterfield, Derby and Nottinghamshire. We hope that there will be more.
My hon. Friend the Member for Harrow, East (Mr. Dykes) referred to the opportunities for enterprise resulting from the privatisation of major industries. I do not want to enter a great argument now about the rights and wrongs of privatisation and what it achieves. But constituents have told me that merely transferring a major enterprise or utility from the public to the private sector does not, on the whole, change the people who work— as managers, or whatever—in that organisation. Many of them, it is said, still maintain the attitudes of the nationalised industry in which they worked before and in which their careers developed. I put that point to my right hon. Friend the Secretary of State for Energy at a meeting last night. I know that, in the privatisation of electricity, he intends to encourage the input of entrepreneurs from outside. It is important not to lose sight of that opportunity in the discussions and developments that ensue from the White Paper.
In view of the time of year I want to give the House one or two reflections on the Budget of my right hon. Friend the Chancellor. It should help to encourage certain activities that are relevant to enterprise—for example, increasing companies' training and R and D activities, and providing incentives to smaller and medium-sized firms to contribute to collaborative research through research associations. The possibility of contributions by local industry to specific non-profit making bodies charged with undertaking activity beneficial to the local community would also be helpful.
There is a consensus among Conservative Members that the high rates of personal taxation need to come


down. The figure generally mentioned is 50 per cent. and I go along with that. The coming Budget is a good opportunity to achieve it. Last week I read in The Times—the Treasury sometimes allows these options to emerge in the public domain to test reaction—that the higher rates might come down to 35 or 40 per cent. We should approach that with care. We are not Saudi Arabia, and cannot afford no income tax or a return to 1939 rates of tax. We still have considerable difficulties and we must consider the political and social realities and pressures in society. I have substantial reservations about that course of action. I urge my right hon. Friend the Chancellor of the Exchequer to try to do much more to make it worthwhile to work at the lowest end of the income scale.
We have done a certain amount about the poverty or unemployment trap through benefits and we got into some trouble over that with regard to housing benefit and other matters. We are approaching the end of that road. We can significantly help and give incentives to those on lower incomes by expanding an idea initiated by my right hon. and noble Friend the Secretary of State for Trade and Industry three or four years ago — a lower employee national insurance deduction for those on low incomes. We should do that rather than assist through a reduced rate tax band. The advantage is that that national insurance reduction would not need to be transferred right up the line. It is a relatively cheap way to help a specific group of people. Employers and chambers of commerce have made that point over many years and I reiterate it today.
My right hon. Friend the Chancellor should also consider giving more incentives to middle management and younger professionals — and I am referring not to the yuppies in the City, but to the professionals in the private and public sectors who pay very high marginal rates of tax. The rise from the present 27 per cent. basic rate to 40 per cent. is extremely steep. I hope that the Chancellor will make that an objective when he presents his Budget.
I hope that the Budget will reinforce and encourage the enterprise initiative that my hon. Friend the Member for Carshalton and Wallington has so fortunately brought to our attention. That enterprise initiative must be related to the important tasks performed by the Department of Trade and Industry, dating back many decades to the days when it was the Board of Trade, to help Britain's trade and industry.

Mr. Graham Riddick: As a Member representing a northern constituency, I often hear it said that there is an appalling gap between the north of England and the south of England—the so-called north-south divide. I have always regarded that idea as somewhat simplistic and misleading. It is wrong to imagine that there is nothing north of Watford, but whippets and welfare scroungers, Labour Members, dark satanic mills, Arthur Scargill and squabbling cricketers and brass bands.
Some of Britain's most beautiful countryside is north of Watford. Some of Britain's most inventive and wealthiest people are to be found north of Watford. Indeed, some of Britain's most thriving industries are in the north. It is too simplistic by half to say that there is a

north-south divide. The hon. Member for Yeovil (Mr. Ashdown) made that mistake earlier. I am sorry that the hon. Gentleman is not in the Chamber now. This is the second debate this week in which I have taken part when the hon. Member for Yeovil, having spoken earlier, disappeared to further his leadership ambitions in other areas.

Mr. Wilshire: The hon. Member for Yeovil (Mr. Ashdown) has gone to look for a party.

Mr. Riddick: That is most interesting.
I believe that the real divide is not so much between the regions, but within the regions. There exists an enormous divide of attitude in the regions. I cannot agree with my hon. Friend the Member for Harrow, East (Mr. Dykes) that everyone has undergone a change of attitude. I fear that that is not yet the case. The real divide exists between the people in the regions who understand the enterprise economy and those who do not understand it. It exists between those who have grasped the opportunities provided by this country's increasing emphasis on enterprise and those who have not grasped those opportunities or are even aware that they exist.
The social divide is between those who have taken the opportunity to buy their council houses and those who have not or, indeed, those who have taken the opportunity to buy shares in the industries that we have privatised and those who have not. The great divide is between those who have started their own businesses and are playing their part in Britain's flourishing private enterprise and those who do not understand or recognise the opportunities and rewards available from that enterprise.
Since the Government came to power in 1979 they have enormously improved the conditions in which private enterprise has to work, as we all know. I see that the hon. Member for Great Grimsby (Mr. Mitchell) is laughing. He should remember that we have reduced direct taxation and reformed the capital taxation system to provide proper incentives for individuals to work hard to produce the wealth that is so vital to this country's well-being. We have reduced the tax burden on small and large companies alike to encourage them to make decent profits. We have reduced the amount of red tape to free more time for the entrepreneur and manager to do what he is best at doing — designing, producing, marketing and selling. We have designed various schemes to help the budding entrepreneur to get off the ground, and the enterprise initiative is probably the best of these. In short, we have improved the overall economic climate so that enterprise can flourish and hard work and talent are rewarded.
As we all know, there is more work to be done; there are more battles to be won and more individuals to be convinced. I return to the question of attitude. Private enterprise, and Britain, will never flourish or achieve its maximum potential until all the people of this country believe in the enterprise culture—until they understand that competition is much healthier than corporatism, and that the ambition to improve the lot of oneself and one's family is nothing to be ashamed of and is much more laudable than relying on someone or something else. It is the age-old battle between those who believe in independence and those who believe in reliance. The real divide is between those who believe in freedom, choice, responsibility, and enterprise, which are the values that


Conservative Members hold dear, and those who believe in dependence and servility to the state—the values in which Opposition Members believe.
It is depressing that no Labour Members are present apart from the hon. Member for Great Grimsby. The hon Gentleman said that that they were all in their constituencies. However, if we were discussing a motion about state support for, or investment in, industry, many Opposition Members would he present — and many Conservative Members would be here to argue against the idea. Conservative Members have won the battle of ideas in many parts of the country, particularly in the south of England but also in the west midlands and in many parts of the north. Many thousands of people in my constituency of Colne Valley understand that success and wealth creation come as a result of hard work and enterprise and not Socialism or what Lord Young called the nanny state. That is perhaps why the good folk of Colne Valley elected me — their first Conservative Member in 102 years. However, the battle of ideas has not been won completely and that is why we have no choice but to continue to give more power back to the people and allow them to run their own lives without for ever having to look over their shoulders to see whether the state, in whatever guise, approves.
The Government must address themselves to several areas to ensure that the enterprise initiative and private enterprise fully succeed. Education is the most important aspect of the whole process and the Government clearly agree. The DTI's excellent White Paper states:
The competitiveness of industry and commerce depends on our ability to harness the energy, develop the intelligence and promote the enterprise of our people, especially amongst the young.
I could not have put that better myself and I congratulate my hon. Friend the Minister on those excellent words.
I applaud wholeheartedly the Government's objectives to provide teachers and pupils with a greater exposure to the world of commerce, business and industry, but, most important, we must ensure that each individual has a first-class education. That is why the Education Reform Bill, which is now in Committee, is so vital to our well-being. What is so depressing is the way in which the battalions of education producers line up one after another and effectively say to the Government, "How dare you interfere with our God-given right to, and knowledge of how to, educate the children of this country." It grieves me to say this, but often it seems to be opposition for the sake of it. It is indeed a battle between the producers and the consumers of education.
Before I came to the House I worked in industry and spent a great deal of time interviewing people for jobs. When I interviewed for jobs that required O or A-levels, I was horrified regularly at the low level of general literacy and numeracy of many young people. It is not their fault. How unfair it is for them that they did not receive a proper basic education and for the 25 per cent. of Britain's long-term unemployed that they are either innumerate, illiterate or both. How can we expect them to play their part in Britain's ship, HMS Enterprise, if their education has not developed their intelligence, innate skills and ambitions? Our education reforms are a key factor in the Government's enterprise initiative.
I am lucky to have an American student working for me as a part-time research assistant. Earlier this week I told her that I was hoping to speak in this debate and she

did a bit of work for me. Most of all, she put across to me strongly that in America enterprise and business are stressed at all levels of the education system, that in the universities and colleges tremendous stress is put on business and economics, and that people want to study those subjects. In no way is a career in industry frowned on.
My assistant pointed out that the Olympics in Los Angeles were wholly financed by private money and made a healthy profit. It was the first time that it had been done, yet the American people thought it was an admirable idea. If we were to host the Olympic games there would be no question of private enterprise; it would be down to the local councils. There need to be changes in education and attitudes.
One of the bees in my bonnet—as with education this one is not the responsibility of the DTI, although perhaps it should be — which is shared by my hon. Friend the Member for Walthamstow (Mr. Summerson), is that one of the greatest obstacles to economic progress in inner city areas, towns and industrial areas, such as Colne Valley and Huddersfield, is the planning restrictions which can do so much to stifle enterprise, small businesses and entrepreneurs. I want the green belt protected, which is why it is important that we provide land for industrial and commercial development, for use by entrepreneurs in our towns and cities because that is the way in which we create new jobs.
I know of several developments in my own area of west Yorkshire which have been delayed, frustrated or even stopped because of the planning refusals, or the unnecessary planning restrictions and conditions that make the enterprise barely viable or, in some cases, impossible. There are a whole host of reasons for that. Sometimes it is because the plans are contrary to the local plan or because the highway department or the water authority objects. Sometimes the fire regulations make it difficult to proceed; and it is sometimes because of the Government. In my constituency for example, 128 buildings were listed as of historic importance in 1980. By 1987 that figure had increased to1,455—it had been multiplied by 12. When such buildings are listed, we restrict their use for industrial development. Of course, we must protect our architectural heritage, but I believe that that has gone too far.
I hope that my hon. Friend the Under-Secretary of State for Industry and Consumer Affairs will not he too disappointed that I have not referred to many of the proposals in his White Paper. There are not many proposals in it with which I disagree. It is a very good document and I welcome the increased business development help and consultancy that it outlines. I am pleased that it recognises that red tape and bureaucracy equal time-wasting and enterprise-blunting.
The real secret of the success of enterprise in this country lies outside the remit of the DTI. The downward spiral of income tax must continue, as must the reform of capital taxation. I have not touched on trade because I have not had the time. Clearly, the Government's emphasis on high-quality training is excellent. I hope that as British firms continue to prosper they will start to do more and more of their own training. Furthermore, the consistency and stability with which the Government have provided economic policy during the past eight years is of


equal importance to enterprise. However, most importantly, we must get the education system right. We must change attitudes and we must get the planners off the backs of the entrepreneurs.
Free enterprise is at the heart of Britain's economic renaissance. The spirit of invention and enterprise is working in Britain once again as it did 150 years ago. If Government create the right conditions, free enterprise will do the job of reducing unemployment and creating wealth and happiness for the British people.

Mr. John Bowis: One of the prerequisites of these Friday debates appears to be to say where we were before coming here. My hon. Friend the Member for Taunton (Mr. Nicholson) has been to the sunny sands of Saudi Arabia. The Opposition spokesman the hon. Member for Great Grimsby (Mr. Mitchell) is from the sunny sands of Grimsby. I have come from the dentist and, for that reason, I apologise to my hon. Friend the Member for Carshalton and Wallington (Mr. Forman), who opened the debate, for being absent. While he launched eruditely into the subject of enterprise, I had my feet up and was flat on my back, being capped—no doubt an experience more often felt by Opposition Members.
I very much enjoyed the speech of my hon. Friend the Member for Colne Valley (Mr. Riddick) and the other speeches that I was present to hear, but unfortunately I did not hear the opening speech. I am sorry that my hon. Friends have been so adamant about the green Benches of the Opposition. It is quite restful on the eye, and I am sure that the hon. Member for Great Grimsby is worth the rest of them put together, with his wit and the entertaining speech that is about to come. Linked to the wit and musical talents of my hon. Friend the Parliamentary Under-Secretary of State for Industry and Consumer Affairs it should be a fine summing-up for a Friday afternoon. We look forward to it.
I refer first to the changes in our society and the need for enterprise initiatives of all kinds to adapt our society to those changes. We must take into account the fact that we are moving from a world in which we spend two thirds of our life at work to a world in which we spend one third of our life at work. That is partly because of shorter hours, the shorter working week, longer holidays and earlier retirement.
We are also moving towards a world where, increasingly, people have more than one job at a time and more than one career during their working lives. We are also moving towards a world where employment in itself is no longer the norm, as more and more people are becoming self-employed. That is where such initiatives are particularly important.
About 700,000 new businesses have been created in the past eight years and the number of self-employed has increased from 1.9 million to about 2.6 million between 1979 and 1986, although the Minister may have more up-to-date figures. It is welcome to note that almost 250,000 people have taken up the enterprise allowance scheme. That is a new way forward, but we have a long way to go to catch up with some of our competitors abroad in encouraging smaller firms.
In Japan, for example, almost 50 per cent. of people work for firms which employ fewer than 20 people and

only 8 per cent. work for firms which employ over 500. The same pattern is apparent in France and Italy. However, in Britain, some 26 per cent. of people work in big firms and only 25 per cent. in small firms.
There is much scope for greater expansion of our small firms sector and of the self-employed sector. The rewards are there to grasp. The recent report from the university of Newcastle, compiled by Doyle and Gallagher, showed that, from 1982 to 1984, only firms which employed fewer than 20 employees were the net creators of jobs. That is significant. The birth and expansion of firms is occurring in those sectors. They are creating the jobs on which the British economy so desperately depends.
Small firms have many benefits. Obviously, managerial control is much simpler, industrial relations problems are fewer and quality is more responsive to customer needs. However, small firms also have to contend with many problems. Their ability to innovate after the first idea is more restricted. They are more likely to have cash flow problems and less likely to have cash for investment and research. They are also less likely to understand marketing and export aspects and the technology that we need to encourage them to tackle. That is not surprising because most small firms start with an individual who has an idea. He does not start as an expert on marketing or man management.
We can give much more support to small firms. I welcome the initiative, particularly the marketing aspect, not only in terms of expanding horizons for the marketing of small firms, but of encouraging small firms to consider the nitty-gritty of advertising. Too often, in small firms' advertisements, one sees the small ad mentality of trying to fit as many words as possible into a confined space, hoping to get the message across. Advice on that matter could go a long way to assist such firms.
I also welcome the changes which will make access to the various schemes easier. For example, under the loan guarantee scheme, since 1981, £600 million has gone to 18,000 small firms. Very few of those grants have been in amounts of less than £15,000, yet the small grants are often the most needed. Grants under the scheme have been most difficult to obtain because of the complicated procedure involved. It is good that the Government and the banks have worked together to ease that problem.
I also welcome a move that is occuring in the EEC. I do not recall that the hon. Member for Great Grimsby has ever welcomed anything from the EEC, except perhaps the fish which, of their own free will, swim into the Grimsby docks—

Mr. Austin Mitchell: The other way.

Mr. Bowis: Into the Grimsby nets, and then they go the other way.
The hon. Gentleman might force himself to welcome the movement in the EEC in respect of the fiche d'impact. It is difficult to translate, but it has nothing to do with fish. It does not translate exactly as the enterprise and deregulation unit but it requires all legislation and amending legislation to go to a committee for its impact on small firms. Until it has been through that process, legislation cannot be enacted. There is a lesson for my hon. Friend to preach to his colleagues in some of the other Departments—not least the Treasury and the DHSS—to ensure that their legislation has no unfortunate impact on small firms, as, sadly, it too often has.
I welcome the shift in DTI spending away from the broad regional grants to more selective spending on technology, research and development and advisory services. That is the right way to encourage businesses to start and to grow. In the latter context, it is good to see that spending has increased from about £142 million to £147 million, approaching three or four times as much, over the period of this Government.
Hon. Members have raised the problems of labour shortage and uncertainty over the housing market, among others. Again, I hope that my hon. Friend will speak to his colleagues in other Departments about the effect of the cost of local government on small firms. Progress is being made in many parts of the country, not least my own area in Wandsworth, where the partnership between local and national Government has brought in more new firms—including manufacturing firms. In Battersea, we have reduced unemployment by 19 per cent. in the last year, and in Wandsworth it is down to 9·2 per cent. Wandsworth is the only inner London borough, apart from the City of London, where unemployment is below 10 per cent.
Much of that improvement is due to the policy of keeping rates low so that jobs can be created in the inner cities, and there is a fear that the new uniform business rate will have an unfortunate impact on some small firms. The National Federation of Self Employed and Small Businesses did a survey of its own members, and found, for example, that a new engineering workshop in Norfolk would be paying 219 per cent. more in UBR, a hairdresser in Lincoln 300 per cent. more, a pub in Broadstairs 362 per cent. more and a railway arch workshop in Slough 440 per cent. more. Although the Government are rightly trying to help the north, as opposed to the south, in some of their rate reform policies, when they say
The more prosperous businesses in the South East will be paying more rates",
they must be using a transferred epithet, because businesses in the south-east will pay more business rates whether they are prosperous or not.
I do not wish to cut into the happy duet that we are about to enjoy, but 1 briefly ask my hon. Friend the Minister to pass on to his right hon. and noble Friend the Secretary of State my welcome for his use of 25 employees as the definition of a small firm. In the past, figures of anything from 100 to 250, or even 500, have been used. In fact, about 78 per cent. of firms employ five or fewer people, and the enterprise initiative package will assist those very small firms to grow.
I look forward to hearing what my hon. Friend the Minister has to say, and I am grateful for the opportunity given to us by my hon. Friend the Member for Carshalton and Wallington to debate the matter.

Mr. Austin Mitchell: I shall begin the basso profundo part of the duet, leaving the tremolo to the Minister, who has brought the skills of rock opera to the Department of Trade and Industry.
Let me first congratulate the hon. Member for Carshalton and Wallington (Mr. Forman) on winning the ballot. I must congratulate him rather less on the motion, which, had it come from anyone else, would have been regarded as pure sycophancy — a desperate attempt to escalate an hon. Member's career from the higher reaches of Parliamentary Private Secretary. In the hon. Gentleman's case, however, I accept that it is not

sycophancy, but is meant sincerely. I have heard him on this subject before, and I know that he speaks from a genuine concern.
I hope, however, that the hon. Gentleman will admit that the motion has brought an incredible amount of economic illiteracy into the Chamber. Perhaps it is just because it is Friday. It is amazing, when we pick up stones on Fridays, what crawls out from under them. A bigger collection of political twerps and economic illiterates have spoken today than I have ever heard before. Apart from the hon. Members for Harrow, East (Mr. Dykes) and for Battersea (Mr. Bowis), whose speech I enjoyed, the economic illiteracy has been tremendous.
I hope that the Minister can distance himself from some of the nonsense that has been mentioned by Conservative Members. It has been my pleasure to hear all that nonsense because I am Leader of the Opposition (Friday). Warhol said:
everyone will be famous for fifteen minutes"—
and indeed, everyone will be Leader of the Opposition for a morning—today it is my turn. In that capacity I wish to comment on the essence of the debate, the enterprise initiative document.
Gladstone used to entertain parties of visiting Liberals on his estate of Hawarden, where the great man relaxed by chopping down trees. Lord Randolph Churchill said that all that Gladstone's visitors went away with were chips from the trees that he had chopped down and that that was all he had provided for the people of the country. Churchill said:
He told them that he would give them and all other subjects of the Queen much legislation, great prosperity and universal peace, and he has given them nothing but chips. Chips to the faithful allies in Afghanistan, chips to the trusting native races of South Africa, chips to the Egyptian fellah, chips to the British farmer, chips to the manufacturer and the artisan, chips to the agricultural labourer chips to the House of Commons itself.
Gladstone was a big man, but the man whose initiative we are debating today is certainly not big. Gladstone was a hairy man, but mine brother Young is a smooth man, a more emollient presence than Mr. Gladstone. Certainly, Lord Young of Graffham did not chop down the trees himself—if we consider those trees to be the great oaks of British industry — they were brought down by the economic insanity that the Government pursued from 1979 to 1982. During that period one fifth of the British manufacturing capacity was closed down and 28 per cent. of manufacturing jobs went. Indeed, 1·8 million manufacturing employees lost their jobs and, for the first time, we became a net importer of manufactured goods.
Lord Young has been sent in to clear up the resulting disastrous landscape created during that period. He has been sent in to pick up the chips and to redecorate the stumps. It is similar to the joke that Adlai Stevenson made of Richard Nixon, namely that he was such a good politician that if he chopped down a great redwood he would stand on the stump and give a speech in favour of conservation. That is not Lord Young's job, he would get an advertising agency to do it for him. Indeed, the budget for the enterprise document and its promotion on television is £6·3 million. That money will be spent lo pull the wool over the eyes of the people.
Lord Young would tell us that the trees have been chopped down for the best possible reasons. Some £6·3 million is being spent on telling us that the DTI is doing more when, in fact, it is doing less. The Conservative party


often claims that the Labour party throws money at problems. It appears that Lord Young throws advertising agencies at problems and expects them to provide some kind of solution. The maxim is, "When in doubt advertise", and the DTI's advertising budget is expanding pari passu with the deficit in manufactured trade.
Lord Young has an advertising budget to tell us that the stump is still flourishing. All that it needs is good advice about its appearance and perhaps a consultative agreement with a painter to redecorate what is left of the stump of British industry.
Lord Young's job as a Minister is not to solve problems, but to conceal them. The Prime Minister has said, "David is not like other Ministers." That may be a compliment, but I am not sure, given the calibre of other Ministers. The Prime Minister has said, "Other Ministers bring me problems, David brings me solutions." Some might wish that that solution was a dilute mixture of tranquillisers or hemlock. That is not my wish. The solution that is brought to the Prime Minister in the initiative we are debating today is smarm—derived from Lord Young's repeated words, "Yes, ma'am." Smarm as the answer to Britain's problems is oozing out of the DTI.

Mr. Forman: As the hon. Gentleman is talking about the direction of the DTI under its present leadership, does he not at least pay tribute to the fact that since 1979 the balance of spending within the DTI has shifted dramatically away from propping up the industries of the past towards greater support of innovation and research and development? Is that not exactly what the Labour party would wish?

Mr. Mitchell: The hon. Gentleman is still working for that promotion. Of course we welcome that shift. However, it is shift within a reduced and misapplied budget. There is no strategy for the regeneration and encouragement of British industry.
Returning to Randolph Churchill and Lord Gladstone, what does Lord Young say to a nation which now has a higher level of import penetration than any other advanced industrial country? What does he say to a nation in which the imports of foreign manufacturers as a proportion of British output was 9 per cent. in 1966 and is now 48 per cent. — double the proportion in west Germany and in France? What does he say? He advertises. What does he say to an economy which has just had its worst ever monthly trading deficit? He advertises. What does he say to a manufacturing industry that has gone from a £5 billion surplus in 1978 to a £7 billion deficit? He advertises. What does he say to his ministerial colleagues who are now seriously embarrassed at the failure of the DTI to stop that trade gap widening remorselessly this year? He advertises.
The White Paper and its associated documents that have been pouring out from the DTI are an advertising compendium with no substance. They are irrelevant to the real problems.
The problem is that industry was so badly battered by what the Government did between 1979 and 1983 that the industries that survived the economic holocaust caused by high interest rates, an overvalued pound and a depressed and deflated domestic economy because of cuts in Government spending, had to throw overboard research,

design, development and training — indeed, everything that makes for non-price competitiveness. They had to do that simply to survive.
Investment is still down. As a nation, we spend three times less on each individual training system than is spent in Sweden. We produce three times fewer trained engineers than France. Research, design and development have all gone.
Now, in this motion, we are asked to praise the DTI's belated efforts in that direction. Praise is due to them, but it is about time they saw some light. They cannot simply graft on those measures and expect them to take. They cannot expect business to become competitive by grafting on research and design through consultancy arrangements. Research and design spring from competitiveness, they do not produce it. They are a reflection of competitiveness and the dynamic of British industry which begins with price competitiveness and generates profit.
Profits have always been too low in Britain. If we had higher profits we would have invested more, there would have been improved productivity, output and quality. We would have been able to spread research, design, development and model changes in the automobile industry over a larger output, thus pressing less heavily on each unit cost. If we had been able to do that, we would now be more competitive. We cannot graft on competitiveness at this late stage after the prelude of 1979 to 1983.
Competitiveness is a syndrome; it cannot be created by consultancy arrangements. It is a driving desire for change, growth and expansion, a desire to compete and to win in the world market which does not exist because industry has been cowed and battered by what has been done to British industry in the name of monetarism. The danger is that we are now locked into a lower level of output and production. It is difficult to expand beyond it without sucking in imports and worsening the balance of payments.
It is true that there was an improvement between 1986–87. The pound and oil prices came down. Therefore, our exports became slightly more competitive. Productivity went up and unit labour costs went down. The Government were beginning to learn some economic sense—if we run the economy for competitiveness, we can increase productivity and bring down unit labour costs by the expansion that that generates. But we must run the economy to be competitive. The Government were prepared to do that only because an election was in the offing in 1987. It is certainly not the start of an economic miracle.
We shall face serious difficulties in manufactured trade—difficulties to which the enterprise initiative is largely irrelevant. With the dollar coming down, we face the fact that two thirds of the increase in manufactured exports that has occurred since 1979—it is a small increase—has gone to the American market. That two thirds is now threatened by the fall in the dollar. Also, American exports have become more competitive. They are already considerably more competitive in volume terms. Trade that is diverted from the American market competes more bitterly and intensely with our other traditional markets. We are still in the syndrome that the NEDC diagnosed in the 1970s, when Britain turned out products of a lower unit value than France or West Germany but imported high-value goods. That is still true.
Imports are taking an increasing share of the British market. That sounds incredible, after all the praise of the regeneration of British manufacturing that has come from Conservative Members. If British manufacturing has been so powerfully regenerated by the new spirit that the hon. Member for Colne Valley (Mr. Riddick) wanted to make compulsory in schools—he scolded the unemployed for not feeling the new spirit of enterprise—why is it that, between 1979 and September 1987, the percentage of the domestic chemicals market taken by imports increased from 30 per cent. to 40 per cent.? That was in less than 10 years.
The proportion of imports in mechanical engineering increased from 29 to 38 per cent., in electronics from 31 to 48 per cent., in motor vehicles from 38 to 48 per cent., in textiles from 33 to 46 per cent., in clothing from 29 to 38 per cent., in washing machines from 28 to 35 per cent. in 1987, and in televisions from 22 to 37 per cent. If we are so good, why has that happened? It is because industry has been so badly treated by the Government that it has not been able to compete. We cannot make it compete by grafting on the new elements that have suddenly been thought of by Lord Young.
All the basic weaknesses of the British economy still exist. They have to be dealt with—not the peripheral matters with which the enterprise initiative deals. I shall quote various reports that have been produced over the past few months about the state of British manufacturing. I hope that the Minister will give us his assessment of their accuracy. Investment is almost the life-blood of competitiveness — the one thing on which we have to fight back against the world — yet investment in manufacturing is 9 per cent. lower than it was in 1979. Indeed, in large sectors there has been a net disinvestment. We have been living on the seedcorn. The annual industrial survey of the Financial Times in January 1988 stated:
In many areas … it is difficult to escape the conclusion that the rising sales of British goods derive less from investment in new products than from competitive prices, stemming from relatively low wages, and a currency level which, until recently at least, has been competitively priced.
On productivity, a summary of recent academic research by Warwick university states that Britain is still part of a
vicious and self-perpetuating spiral of low wages, low morale and low productivity.
A CBI memorandum to the NEDC last October states:
Britain remains a relatively low-pay, productivity, low profit economy".
How will we improve all the things that we are supposed to improve in design if we have a low-pay, low-profit economy, if we do not involve workers, and do not generate investment? The Cranfield-British Institute of Management study, entitled "Managing Manufacturing Operations in the UK, 1975–1985" stated:
The regrettable but overwhelming conclusion must be that very little has happened in manufacturing operations in the UK over the last ten years. This is particularly true in the key areas of 'competitive' edge — delivery reliability, lead times and use of new technology.
That is the background.
We welcome the provision of help and these consultancy arrangements in design and marketing. There should be a bonanza for the consultancies. They will produce a lot of advice, some of which will be practicable for British industry. It is just not enough. If the Department of Trade and Industry is prepared to

recognise that the state has a role to play in offering these consultancy arrangements, and encouraging manufacturing in this direction, why does it not extend it in other sectors? In our competitor countries, Governments and Government Departments offer help to their manufacturing industry. They offer support, investment, finance and a closer working relationship with Government Departments than British industry has ever enjoyed. Why is assistance offered for sectors such as design but not for all the other problem areas faced by industry, and, in particular, why not for research and development?
Research and development must be the key to new processes and new competitiveness. The DTI has spent £30,000 on a report from Coopers and Lybrand on innovation centres, which I think are necessary for Britain. Coopers and Lybrand found, no doubt because that is what the Department wanted it to find, that innovation centres were not necessary. But Japan has 190 of them, all state funded.
The Lords Select Committee on Science and Technology produced one of the most damning reports on British investment in research and development that I have ever seen. It paints a depressing picture which is contrary to that created by the advertising monstrosity that the DTI is putting out. Lord Young told that Committee that recent Organisation for Economic Co-operation and Development figures for industry-funded research and development in the United Kingdom and competitor countries gave cause for "considerable concern". He was half right. It should have been "overwhelming concern". He also said that he saw it as
central to the Government's philosophy that the motivation for spending more on R and D must come from industry itself.
The problem is that it has not done so. It does not seem likely to do so and the Government are doing far less than they should. If we cut out defence-oriented research and development, the proportions of Government-funded research and development in EEC countries is: Germany 34 per cent., France 26 per cent., and United Kingdom 16 per cent. In other words, we are spending about half per head of what Germany is spending, about 60 per cent. of what France is spending and just a little over what is spent by those industrial powers, Italy and Belgium.
The conclusions drawn by the Committee, which looked in detail and heard evidence from all interested parties on the state of research and development, were:
the overwhelming weight of opinion from almost every sector of the research community and from the private sector is that Ramp;D in many fields is underfunded, and in some cases seriously underfunded … These two views should not be taken together to mean that the underfunding is wholly the responsibility of the Government. This is not true. A large share of the responsibility rests with industry, who have failed to invest enough in Ramp;D and to appreciate its importance. Other sections of society, particularly the City and institutional shareholders, have to accept some responsibility. The Committee are concerned at the comparative failure of British industry to undertake and to finance Ramp;D, and its disposition to rely on publicly funded work.
That is a crashing indictment of British industry and the Department of Trade and Industry, which has not been encouraging it to spend more on British research and development.
In the light of that failure and of the realities—not the public relations realities projected by the Department through its advertising budget and by Conservative Members reading Central Office briefs — the initiative


that the hon. Member for Carshalton and Wallington asks us to commend is silly, smarmy and irrelevant to the real problems facing manufacturing. It is not a case, as the hon. Member for Yeovil (Mr. Ashdown) said, of fiddling while Rome burns, because the motion commends the increase in the output of firelighter manufacturers and offers them design consultancies on the shape of the briquettes that they manufacture. That is worse than fiddling while Rome burns.
The real problem is the industrial decline that must be reversed. We have wasted the oil opportunity that should have been used to expand the British economy to a new industrial strength. That opportunity was largely thrown away. Let me declare my overseas visits. In November 1987 I visited the United States and not Saudi Arabia. While I was in the United States, Senator Moynihan said that President Reagan's economic policy consisted of borrowing $3 trillion from the Japanese and throwing a party. The Government have taken the wealth from the North sea and thrown a party and, being mean, they have invited only their friends and not the mass of the British people in the way that Reagan invited the mass of the American people.
The Government have destroyed jobs and will be the only Government to go out with fewer jobs than they came in with. Over the same period America has created 10 million jobs by expanding the economy. What will happen in the 1990s when the oil contribution finishes? We will move into deficit in oil trade in 1991. The Government have used the opportunity of oil to destroy much of our manufacturing industry and we have moved into a horrendous and growing deficit on manufactured trade. I ask the Government to tell us what will happen when the oil goes in the 1990s. How will we survive and provide the jobs, preserve our standard of living, and generate growth unless we rebuild manufacturing industry? That cannot be done by the tinkering that is contained in the White Paper.
It is not a question, as the White Paper says, of a hands-off approach to industry. We have to run the economy for manufacturing, and that is what a Labour Government will do. We shall run the economy for growth, for expansion, for manufacturing and for jobs. We will not run it for finance or for the interests of money and those who have it or for high interest rates. We shall put money to work for the people and for industry. That is what any responsible Government ought to do. The tinkering in the White Paper is not reality.
British industry is now in a war, an international struggle for survival, and it is not surviving very well. Survival does not depend on small firms, 94 per cent. of which do not export. Survival depends on the big battalions and on the Government's co-operation with them to rebuild the country's economic fortunes. We send British industry into that international struggle burdened with heavier costs than its competitors. It has heavier rail transport costs and heavier electricity charges, just wilfully increased to fatten up the electricity industry for privatisation. British industry also has heavier interest rate charges than its competitors, and all those burdens are influenced by Government.
We are asking industry to fight that international war with that ball and chain round its leg. It has gone into battle not with protection and help from the Government, because it has been stabbed in the back. Any firm that

invests substantially in research and development and in new products and modernisation, and diverts money from immediate profits to investment is promptly the object of a takeover bid because its share price is depressed by the very techniques of investment that are necessary to survive the international struggle. We send it into battle and we stab it in the back, and Pilkingtons is an example of that. The company then has to spend millions in fighting off the threat of the takeover bid. Lastly, we send it into battle not with Government help and co-operation, but with a Government running the economy for finance. The Government are now killing the goose, the fall in the pound from 1986, that has laid the Government's golden and electoral eggs. The real value of the pound sterling has appreciated by 13 per cent. since the last quarter of 1986. The Government complain about the increase in wages, but there has been a 13 per cent. increase in the real price of the pound. That is a bigger burden on industry than any increase in wages, and it is a direct consequence of the Government's policy of tying sterling to a deutschmark whose value must increase.
The terms of trade for manufacturers are worse than they were in 1981, and disastrous consequences will follow, just as they did in 1981. As the hosannas about success from the grovelling chorus of sycophants from whom we heard today ring loudest, matters are turning sour. We have returned to the stop phase in the stop-go cycle, and all that the Government have to offer to counter it is fatter consultancies. They are an irrelevancy.
The prospects are bleak and becoming bleaker. The balance of payments is widening, and the Government's only answer will be deflation. Exports will suffer and imports will become more competitive. None of that reality emerges from this half-baked, inadequate White Paper which fudges every issue and gives solutions to none of the problems. Essentially, it is the bland leading the blind stumblingly downhill.

2 pm

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. John Butcher): I thank my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) for the timeliness of the subject that he chose for the debate. He has done the House a great service in providing us with an opportunity, for the first time in this Chamber, to consider the White Paper and the enterprise initiative and to discuss — fortuitously, only a few days before the Budget—many issues which hon. Members on both sides of the House believe should be aired.
I was interested to hear the latter comments of the hon. Member for Great Grimsby (Mr. Mitchell). When, during his peroration on exchange rates, he launched into an analysis of competitiveness, he illustrated clearly the chasm between his approach and the approach of my hon. Friend the Member for Carshalton and Wallington to what precisely is required in the British economy to make us more competitive. My hon. Friend focused on non-price factors, just as the nations with appreciating currencies, such as Japan and West Germany, focus on non-price factors. If anything gives the lie to the contention of the regressive, unconstructed, backward-looking Labour party, it is this: if it was all about exchange rates, the German economy would be on its knees because it has had to cope with constantly increasing values in its currency, as have the Japanese. But they have insured


themselves against the currency-based erosion of their competitiveness by becoming involved in the issues which my hon. Friend highlighted.

Mr. Austin Mitchell: Does not the Minister realise that it is precisely because those countries built their industrial power that they can sustain an appreciation in their currency? We cannot, because we are weaker. If a country's output of motor cars is 3 million, 4 million, 5 million, 6 million or, in the Japanese case, 7 to 8 million, it can spread the costs of research and design over the larger output. British Leyland produces just over 400,000 cars, which is probably about the same figure as in the late 1940s. We cannot afford the appreciation because we have not grown as much as those countries have.

Mr. Butcher: The hon. Gentleman is a perceptive man and a well-thought-of member of the Labour Front Bench. If he was giving a lecture on the economic history of the United Kingdom away from the House, he would acknowledge, rightly, the role of leads, lags and trends in an economy. Much of his speech reflected the worst sort of short-termism. He attributed to this Government faults that have been building up in our economy for a long time, especially as the world recession hit our manufacturers harder than it hit most, for reasons that I shall give in a moment. But the Germans have coped fairly easily with an increasing value of their currency because they set the framework of their economic miracle against clear principles back in the period from 1949 to 1953. As I said in a previous speech, their policies bear a strong resemblance to the policies that we put in place, in macroeconomic terms, particularly from 1982 to 1985.
Therefore, when the hon. Gentleman does his United Kingdom tour as part of the listening role of the Labour party, I hope that, when he launches into his lectures in Great Grimsby, Scotland or wherever, he will regale some of his colleagues in the Labour party with the lessons of the German economic miracle and that he will look at the period of German economic history between 1949 and 1953 when Euchen, an excellent economist, and Ehrhardt, an excellent Chancellor, laid the foundations for that German economic miracle, which are similar to the foundations that we laid in this Administration, in the teeth, at the beginning, of a world recession.
I endorse the comments of my hon. Friend the Member for Carshalton and Wallington on non-price factors. He is absolutely right to focus on quality, design and marketing as just three of those non-price factors. They represent the effort, the three enabling skills in a company, that must be deployed to best possible effect. I shall come back to some of my hon. Friend's comments later.
The hon. Member for Yeovil (Mr. Ashdown), who gave his apologies to the House for leaving early, demonstrated yet again that he is the master of the mixed metaphor and that he can give a speech on any subject at any time with the minimum of consideration. Therefore, he is ideally equipped to be the next leader of the Social and Liberal Democrats, or whatever name they will be trading under at the next general election.
Let me look at the meat of the hon. Gentleman's argument. He said that we were not doing enough for small firms. He said that we had policies in place for setting up small firms, but with the exception of the business expansion scheme we were not doing enough to see them through the initial period of consolidation into further

expansion. The hon. Gentleman has therefore completely misread the White Paper; he has completely misread the Department's latest initiative, because there is a whole raft of measures inside the enterprise initiative designed to help small and medium-sized companies to grow and to fill in the missing capabilities that they often find are exposed when they expand from a small company into a medium-sized company and, we hope, with many of them, eventually into a large company.
The hon. Gentleman seems to be stuck somewhere around 1968 in his appreciation of measures required to revitalise Britain's economy. I shall not hazard a guess at where the hon. Member for Great Grimsby is, but I think that he is somewhere between 1951 and about 1975½. I do not think that he is a root-and-branch clause IV man, but he is pretty much into the motherhood statements of the mid-1970s when he puts forward his recipes for recovery in Britain.
My hon. Friend the Member for Harrow, East (Mr. Dykes) talked about change of attitudes. That is remarked on by those who have the advantage of coming back to this country having spent a period abroad. If one talks to a business man who has been away for four or five years and who has returned to the United Kingdom in the past two or three years, such people remark on the demonstrable and sometimes spectacular change in attitudes in the board room where our managers are much more professional and ambitious, and on the shop floor where trade unionists and the work force are rediscovering some of the basic virtues that are the key generators of employment.
I should like to mention the names of some fairly typical people to whom we in the DTI talk, who are not members of the chattering classes but who in many past conversations have influenced the formation of our policy. One, whose observations I have noted over a period, is the trade unionist, Bill Jordan. When the Labour party listens, I hope that it will listen to trade unionists such as him. I assume that when the Labour party and trade unionists meet, their conversations are about getting money for the Labour party. I do not want to damn Mr. Jordan's career by flattering him too much, but he is an expert on the quality campaign and on quality as a means of preserving and creating jobs. I doubt whether that has been on the agenda of meetings held between him and the Labour party research department.
British management skills, as my hon. Friend the Member for Harrow, East pointed out, are key. My hon. Friend the Member for Dover (Mr. Shaw) pointed out that things now are different from the 1960s and 1970s—we are becoming more professional. He, like my hon. Friend the Member for Carshalton and Wallington, returned to the issue of market share, which must be our national obsession. I am delighted to report that, at long last, the remorseless erosion of Britain's share of world trade in exports between 1964 and 1980 has been halted. We have stopped the rot. When future economic historians write about that period they will observe that a seminal event took place in about 1981–82, when that erosion of our share of world trade was halted.
As my hon. Friend the Member for Dover remarked, management skills are desperately important and today's profits, as he rightly said, are tomorrow's investments.
My hon. Friend the Member for Welwyn Hatfield (Mr. Evans) confirmed one aspect of the White Paper, which is that we are determined to get closer to the customer and to take DTI's services out to those who are best equipped


to take advantage of them. We shall use chambers of commerce when necessary; we shall open more offices; we shall listen to and pick up as many tips as we can on the best way of implementing the enterprise initiative. In the case of my hon. Friend the Member for Welwyn Hatfield, a soccer metaphor is perhaps appropriate. In the past five years Britain has started to move up the league table of economic performance in the OECD. It is our intention as a nation to more even further up it. Having decided that we should not be relegated in 1979–80, we have now moved up to a mid-table position and we must now decide whether to go for the championship. It is a long time since we have had the base that we now have from which to work. If we can make that decision, we must not throw the opportunity away—

Mr. Dykes: Does that mean that Britain is in the position of Queens Park Rangers, Luton Town or Arsenal?

Mr. Butcher: I have learnt on previous occasions in the House never to take sides about soccer. However, my hon. Friend will know that I took just a minuscule amount of pride in the performance of Coventry City in the last cup final. We are today in the position in which, say, Kenny Dalglish was two years ago when he was considering the sort of side to build for the championship—but enough of soccer metaphors. I am now competing with the hon. Member for Yeovil in the mixed metaphor stakes.
We shall pick up the points made by my hon. Friend the Member for Warrington, South (Mr. Butler) about a freer market in books. He was correct to identify the great need in the United Kingdom to provide our teachers with valuable experience in commerce and industry. For the most part, they would welcome that, and I am encouraged by the reaction of commerce and industry to the White Paper. Representatives of the various sectors, such as the Institute of Directors, the chambers of commerce and the CBI, have welcomed our objective of getting 10 per cent. of teachers a year into companies to take a look at the things that will be required of the students in their care when they enter the job market. Warrington and Runcorn has shown that it provides a welcome home for inward investment by providing skilled workers and the right enterprise ethic in the local community. As we have been invited by my hon. Friend the Member for Warrington, South to do so, we shall take a look at the inpediments to trade.
My hon. Friend the Member for Beverley (Mr. Cran), with his great experience as a regional director in Birmingham and as a keen observer of the national scene, made an excellent speech. There is a growing appreciation that we have to encourage our brightest and best younsters to opt for a career in industry and commerce. We need them. There is almost a form of economic warfare in the international market and we need the best people to fight in that battle on behalf of British industry and commerce. I believe that our national culture is changing and that we no longer suffer from the 19th century attitude that our top schools should produce only young people fit to become district commissioners in Africa or colonial leaders in far-flung parts of the world. We want people to lead British industry and commerce in the struggle for world markets.
My hon. Friend the Member for Beverley referred to deregulation. I will communicate to my ministerial colleagues his clearly stated wish that we should take a radical approach to deregulation. My hon. Friend is currently decoding some of the terminology in our documentation and he believes that it sounds rather cautious. If necessary, I will try to persuade my colleagues in the DTI to tune that up and enhance the committment level a little.
Reference was made to the links that must be established between the universities and industry and commerce. My hon. Friend the Member for Beverley will be aware from our recent documentation that a £36 million link programme, the teaching company scheme, has been created. As far as I am aware, that scheme has no enemies. It is universally acclaimed as an excellent way to firm up links between the higher education sector and industry and commerce. Bright young men and women are entering companies on postgraduate projects. They are given specific targets and often surprise the companies by the level of sophistication that they bring to a project.
My hon. Friend the Member for Walthamstow (Mr. Summerson) referred to planning constraints. He brought an interesting nugget of information to the House when he explained that there had been a 62 per cent. increase in rates in his authority coinciding with the authority's marketing efforts in an economic development unit. That often happens in Labour-controlled local authorities. Such authorities seem to produce policies that make their municipalities hostile territory for the private sector and small business men. They indulge in PR massaging. They set up a project which they often call an economic development unit to make a passing statement about their desire to bring employment into the area. For the most part, I am afraid that such action is a somewhat cynical exercise.
My hon. Friend the Member for Taunton (Mr. Nicholson) asked me to consider the trading and export services. I will read the Official Report carefully and respond to him regarding the British Overseas Trade Board.
My hon. Friend the Member for Colne Valley (Mr. Riddick) reasserted his argument that we should do all that we can to make education more relevant to the needs of our economy. Almost in passing he made an observation that could have dominated the debate. This side of the Budget it is probably right that it should not have done so. We have rediscovered over the past four or five years that supply-side economics work. As taxation rates come down, the take increases.
I recall an excellent article in The Sunday Times entitled
Who is selling the snake oil?
In that article the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was portrayed as the cowboy who came to town waving a bottle of elixir purporting to be a cure-all for everything from hair loss to digestive complaints. His cure-all was increased taxation for everything. We have discovered that the converse is true. Reducing taxation at corporate and personal levels increases income for the Chancellor of the Exchequer. The country can then decide how to spend the increased revenue.
My hon. Friend the Member for Battersea (Mr. Bowis) who, as far as I can understand, was fresh from a rectification job on his peripheral caries, brought some interesting comments to the debate, especially about job


creation and the role of small firms. We shall continue to examine what small firms pay to local government. That is a matter not for me but for my right hon. Friend the Secretary of State for the Environment, but it is a key factor. Wandsworth is to be congratulated. Some London boroughs introduced nuclear-free zones, whereas Wandsworth is a de facto enterprise zone. Wandsworth is concerned about enterprise because it knows what enterprise does for jobs. I congratulate that brave and imaginative borough.
That takes me to the comments made by the hon. Member for Great Grimsby. He said that he would speak as a basso profundo. He will know that the basso profundo often takes the part of the jester and sometimes the ogre. I suspect that the captains of industry and some trade unionists who read his speech may see him as an ogre because he made a number of suggestions that would turn the clock back to a time when competition in world markets was not as great as it is now, and seriously weaken our resolve to fight for competitiveness. Many of the policies that the hon. Gentleman would advance would undermine and erode the competitive ethic both in the board room and on the shop floor.
The world recession hit us very hard. The weaknesses in our economy had been building up over a long period. If we can put right in one decade what went wrong gradually over about two decades, we shall have done very well indeed.
I do not know any longer where the Labour party gets its information from. The hon. Member for Great Grimsby is a great researcher and I am sure that in the listening campaign he will be a great listener. Let me take this opportunity—unusually in a debate such as this—to mention some people who, in my view, typify the industrial renaissance in this country. They are not necessarily members of the chattering classes and they are unlikely ever to appear on the Robin Day programme. However, they are certainly worthy of a visit from the hon. Members for Great Grimsby, for Dagenham (Mr. Gould) and for Sedgefield (Mr. Blair). Those people, and hundreds like them, have influenced Government policy, perhaps without knowing it. I see that the right hon. Member for Birmingham, Small Heath (Mr. Howell) is in the Chamber, and our first port of call should be the midlands. Opposition Members should go to Lucas, an excellent company, and talk to John Parnaby, who is probably an expert—probably a world expert — on manufacturing systems engineering. He would probably enlighten the Labour party as to current trends in manufacturing sciences and intellectual investment on the shop floor. They could then go to Rugby to see Brian Small at Ingersoll.

Mr. Denis Howell: Will the hon. Member give way?

Mr. Butcher: I have already given way once.

Mr. Howell: As the Minister has referred to me, should he not give way?

Mr. Butcher: Very well.

Mr. Howell: When the Minister calls at Joseph Lucas on his great tour of the midlands, he will not be able to call at its head office in Great King street in my constituency unless he hurries: it is about to be demolished and hundreds of people are about to be made redundant.

Mr. Butcher: Yes, and the Lucas company is getting into higher and higher added value. It is becoming more and more successful in its aerospace efforts. It is running a very successful Girling subsidiary. There have been redundancies, but those who observe that market would agree that the company could not have pursued its strategic objectives without some redundancies. It is always difficult for a company faced with strong markets in which it does not have an appropriate investment to decide whether to continue to fight in those markets or whether to fight where they can win. I believe that Lucas has made the correct decision.
Hon. Gentlemen should then move on and talk to Malcolm Fraser at the Council for National Academic Awards. He has some excellent ideas on management development and how to produce a modular system of qualifications for managers which builds bridges from the shop floor to academia and out again. It is a flexible system of management training. Clark Brundin, at Warwick university, together with Khumar Battacharya, has shown that universities can open their doors wide to the private sector and gain immense advantage from it. They, too, have a great deal to say on how to build Britain's industrial and commercial renaissance.
Hon. Members may like to talk to John Kerridge at Fisons. He has taken an agro-chemical company into new areas, higher added value, pharmaceuticals and science-based products. James Pilditch has produced excellent work on best management practice in books and journals of his own authorship. If hon. Members are worried about textiles and the so-called older industries— I have never liked that term—they may care to talk to Louis Van Praag who runs a company called Sabre Textiles.
I know that it is unorthodox to mention names, but they are typical of people who learnt from experience and brought a new dimension to management and a new vigour to their companies.
Design is not an extra and it is not about making products pretty; it is about the concept of a product or a service from its beginning—from the core outwards, It is about design for manufacture or maintenance. It is about fitness for purpose and, ultimately, a product's aesthetic appearance in the past four years British companies have at long last woken up to this and many are starting to reap the benefits.
Quality is not a bureaucratic obsession within a company. To repeat a phrase that I have used previously, quality is about selling products that do not come back to customers who do. It is one of the key job creators, as Bill Jordan in the Amalgamated Union of Engineering Workers would confirm. Quality management is now a well-rehearsed science. It does not cost money. Zero defects are now entering company cultures throughout the country.
We in our enterprise initiative support quality, design and marketing. I pay tribute to the Design Council which has run the consultancy programmes for design, the Institute of Marketing and Tony McBurnie, who is administering that side of the programme, and to the Production Engineering Research Association which has helped us to pursue our objectives in improved manufacturing practice.
During the debate we heard a great deal about management and I have a little more to say about]t. In the past we have learnt, as disseminators and distributors of grants, that it is no good whatever to invest large sums to


reduce the investment costs of a company if the people at the heart of that company are not professional and of the highest capability. Company performance is determined more than anything else by the calibre of the people at the centre of its decision-making process. We as a nation must make a major investment in management skills and those of our work force. When John Egan competes with Mercedes it is not Jaguar v Mercedes, but the skills of the people of Coventry in his work force competing with the skills of the people of Stuttgart. If his people are better trained and educated, he can win that battle. If they are not, he will lose it. John Egan and many other chief executives have pursued their objectives in enhancing the quality of their work forces. That is something about which the whole House should be united and which progressive trade unionists have endorsed over a long time. In my view, the best managers and the more enlightened trade unionists are now coming together and are unanimous on that proposition. Another change that has taken place in the United Kingdom during the past six or seven years is that the "us and them" mentality is at long last disappearing.
As far as the initiative itself is concerned, and the current progress, I can happily report to the House that there has been a major response to the marketing campaign—

It being half-past Two o'clock, the debate stood adjourned.

ACCESS TO MEDICAL REPORTS BILL

Ordered,
That Standing Committee C be discharged from considering the Access to Medical Reports Bill, and that the Bill be committed to a Committee of the whole House.—

[Mr. Simon Hughes.]

Committee upon Friday 29 April.

Orders of the Day — PLANNING PERMISSION (DEMOLITION OF HOUSES) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 29 April.

Orders of the Day — SUNDAY SPORTS BILL [LORDS]

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 22 April.

Orders of the Day — UNBORN CHILDREN (PROTECTION) BILL

Order for Second Reading read.

Hon. Members: Object.

Mr. Deputy Speaker (Sir Paul Dean): Second Reading what day? No day named.

Orders of the Day — HOUSING (HOUSES IN MULTIPLE OCCUPATION) BILL

Order for Second Reading read.

Hon. Members: Object.

Mr. Deputy Speaker: Second Reading what day? No day named.

Orders of the Day — OVERSEAS AID (ASSISTANCE TO THE POOREST) BILL

Order for Second Reading read.

Hon. Members: Object.

Mr. Deputy Speaker: Second Reading what day? No day named.

Orders of the Day — OPTICAL APPLIANCES (BLIND AND PARTIALLY SIGHTED PERSONS) BILL

Order read for resuming adjourned debate on Second Reading [12 February].

Hon. Members: Object.

Mr. Deputy Speaker: Debate to be resumed what day? No day named.

Sir John Biggs-Davison: On a point of order, Mr. Deputy Speaker. Would it be in order for me, without detaining the House, formally to move the motion standing in my name on the Order Paper?

Mr. Deputy Speaker (Sir Paul Dean): I am afraid that it would not be possible for the hon. Gentleman to do that. It would have been possible only if it had been reached before 2.30 pm.

Orders of the Day — M20 (Motorway Service Area)

Motion made, and Question proposed, That this House do now adjourn. —[Mr. Dorrell.]

Mr. Andrew Rowe: Nothing generates more heat than a planning proposal, and few roles can be more ungrateful than that of the Minister who has to decide between local outrage and what he perceives as the national interest. Therefore, I enter this debate acutely conscious that my hon. Friend the Minister with responsibility for roads and traffic is under enormous pressure from all sides and that, as the proposal to site a motorway service area at Hollingbourne is currently subject to appeal, he may feel inhibited from making any statement on the issues today in the House.
Nevertheless, I am deeply grateful for this opportunity to put on record, in the Parliament to which all Ministers are ultimately responsible, a number of considerations that I believe my hon. Friend will have to take into account when he comes to take his decision. I also believe, as I shall later show, that there is one decision that he can announce today without trespassing on an area which is properly sub judice and for his right hon. Friend the Secretary of State for the Environment.
I believe in motorways. They are much more efficient than other types of road. They are much less dangerous and they are now the lifeblood of a modern economy. However, if there are motorways there must also be motorway service areas—suprisingly frequently, it would appear. In 1979, the then Secretary of State accepted recommendations that argued for flexibility in spacing motorway service areas, but still expected a frequency of roughly 30 miles. In the 10 years since those recommendations were made, petrol consumption has improved by about 30 per cent., but I suppose that against that the Minister could argue that motorway service areas are much less to do with the motorist's need for putting fluid in than for letting it out. Nevertheless, on roads where a mile takes less than a minute, variations in spacing of 10 to 15 miles are hardly significant.
The idea is to have, in the Maidstone area, a motorway service area on the M20, which is shortly to be completed after many years of mutual frustration, by the insertion of the missing link between Hollingbourne and Ashford. The Department makes much of the need to open the service area at the same time as the motorway. If it were to be the only one, I might be tempted to ignore the precedent of 25 years of unserviced motorway hitherto or the unserviced years of the M25, but it will not be the only one. There will almost certainly be motorway service areas at junctions 3, 4 and 6 on the M25 and at Ashford and Cheriton on the M20.
In that embarrassment of riches, some people might wonder whether we need another service area at all. Many motorists have managed a great number of miles perfectly well without one, but, if we have to have one, where should it be? Since as long ago as 1975, it is clear that voices in the Department of Transport have been arguing to place it at Hollingbourne, and therein lies the major problem, both for those who oppose the plan and for the Minister.
Over the past 13 years, files will have grown fat with letters, memos and minutes of meetings between officials, the sum total of which has been to turn a proposal into a de facto decision. It will need more than sympathy and

vision and more, even, than argument alone to overturn that decision now. It will require ministerial courage of the kind that says to respected senior advisers, "I am the Minister. I believe that that is the wrong decision and I am going to change it." That sort of courage is always in short supply, although less so in this Administration than in most. I believe that my hon. Friend the Minister has that sort of courage in ample measure. All that is needed is to demonstrate to him that since he made the choice of Hollingbourne public in 1986, and certainly since 1975, enough has changed to render a new approach as logical as it is desirable.
I wish to deal, first, with the position of Kent county council. My hon. Friend has every excuse if he feels puzzled by the apparent behaviour of Kent county council. During the recent appeal hearing, an official of that council stated that members of Kent county council supported the choice of Hollingbourne as the preferred site for a motorway service area as far back as 1976. The then vice chairman of the county planning sub-committee, who is now the borough councillor for Hollingbourne has no recollection of any debate on the subject at that time and believes that if the decision were taken at all, it must have slipped into the minutes inadvertently.
Since then the council's officers have been assiduous in promoting Hollingbourne, even to the point of virtually ignoring a recent very firm instruction from the planning sub-committee to carry out a full appraisal of an alternative site. In those circumstances, it would not be surprising if successive Ministers believed that county members approved the choice of Hollingbourne. Indeed, my hon. Friend made their approval an important ground of difficulty in meeting the objections to the site put to him by a delegation from Hollingbourne, which he met on 8 December 1986. When, after many attempts to arrange a meeting between Maidstone borough council and Kent county council had strangely foundered, a site meeting eventually took place on:5 January this year. County council members instantly resolved that the potential of the Allington site should be explored. In response to that, the county officers failed to do any such thing, but simply put another paper to a meeting of the county planning subcommittee on 23 February, reiterating their choice of Hollingbourne, Members rejected that for the second time and demanded a proper study of the Allington site.
The Minister cannot possibly be expected to make a distinction between the opinions of officers and members of a county council, unless the disagreement is brought to his notice, but I should like to assure him that Kent county council, like Maidstone borough council and all the parish councils concerned, wants him to undertake a Full appraisal of Allington quarry as an alternative site for the motorway service area.
A second change since 1975 has been in the growth of traffic. Since 1977, on the B2136, which passes through Leeds village, there has been an increase of 443 per cent. in vehicles with three or more axles, including articulated lorries. In 1986, the Minister's Department admitted that the rate of growth in traffic using that narrow country road was more than twice the national average, and forecast a rise in traffic levels on the road to between 6,500 and 8,000 vehicles per 24 hours by the year 2005.
It will, I am sure, come as no surprise that a traffic survey made in December 1987 showed a 24-hour figure of 8,167 vehicles. I say that it will come as no surprise because it is, after all, the Department that gave us the


traffic forecasts for the M25. I do not know how that Department dares now, in its summary of evidence to the current inquiry, to suggest that we can ignore the claims that traffic is increasing on the B2163, or that the motorway service area would affect it. The M20 interchange will add hugely to the attractions of this wholly unsuitable informal bypass to Maidstone for assorted heavy lorries. If added to that were the lure of a 24-hour service area, Leeds village would be almost destroyed by the burden of traffic.
My hon. Friend the Member for Maidstone (Miss Widdecombe), in whose constituency Leeds village lies, endorses those trends entirely, and she is very sorry that a constituency engagement prevents her from saying so in person. Severe damage to Leeds village would mean a desperate loss. Both halves of the village are conservation areas, and 41 of its buildings are grade 2 listed. They are an important ingredient in what many of the half million visitors to Leeds castle come to enjoy.
The third change is that work has now begun on the Channel tunnel. That will substantially accelerate the already dramatic switch of Britain's trade from other markets to mainland Europe, and will bring many tens of thousands more vehicles and millions more visitors to Kent. With the lively and much-appreciated assistance of my hon. Friend the Minister of State, Kent is working hard to protect itself from the disadvantages of this great innovation, while trying to ensure that it benefits from it also. That is why the council has declared that development will not normally be permitted
if it is likely to cause loss of, or material damage to, landscape areas and features which are: —

(1) representative of the Kent countryside by reason of their physiographic character or vegetation cover, with particular regard being paid to those areas of rare or possibly unique scenic quality: or
(2) of historic interest: or
(3) of an unspoilt quality free from urban intrusion."

I wonder whether my hon. Friend could easily find another area in Kent in which all those criteria come so fully together.
The proposed site is in the North Downs special landscape area. It is within 500 m of the conservation area of Eyhorne street, 1,400 m from the Broad street conservation area to the north and within only 900 m of the park of historic Leeds castle, the third most popular tourist attraction in Britain. The site shares a border with an area of outstanding natural beauty, a designation so special that everyone recognises the names involved: the Lake district, the mountains of Mourne and the Cotswolds. Perhaps all of them are eagerly awaiting the chance to have a motorway service area as well.
A fourth change has been the dazzling success of exquisite Leeds castle as a tourist attraction. Host to half a million visitors a year, its special events attract between 10,000 and 20,000 visitors or more. On a fine summer evening, how many of them would park their cars in the motorway service area for a ready getaway after the concert, and how useful would a motorway service area, so blocked, be to the road user?
I shall not pretend that Leeds castle's success depends entirely on leaving its neighbours, Leeds village and Hollingbourne, undisturbed. However, I share the managing director's view that a lorry park, a caravan park and a possible motel in a motorway service area would

make a change so fundamental in the castle's environment that no amount of landscaping would do more than garnish the wound.
In the old days, the rich used their influence to keep modern developments, such as the railways, at a distance from their estates, and there must always have been a temptation for Ministers to tease them when they could by defeating their endeavours and lumbering them with a line beneath the fences of their estates. In this case, the rich man is replaced by the half million ordinary citizens who come to Hollingbourne and Leeds village to see ancient England at its best. It would be a sorry memorial to be remembered as the Minister who gave them the inescapable view of a lorry park.
A fifth change relates to the position, in planning terms, of Allington quarry at the Coldharbour interchange. Until recently it was the subject of a major planning appeal. When we went to see the Minister on my birthday last year he told us that he would be unable to accept a motorway service area as part of a site where alcohol was on sale. Indeed, he also believed that the proposed development would not leave room for a motorway service area. Both of those difficulties have disappeared with the refusal of planning permission. However, two other difficulties remain. One is the nature of the refusal. The Department of Transport seems to believe that its terms preclude the use of the site for a motorway service area or anything else. The second difficulty is cost.
The valuer retained by the Department placed a value of £285,000 per acre on the Allington site. That value depends entirely upon "hope value." No developer would pay £285,000 as "hope value" for land subject to ministerial restriction of the nature described. At most, the developer would buy an option. It is important to note that an equally qualified valuer put a value of only £2,000 per acre on the site. That presupposes that the land carries only agricultural value.
The only things that are clear in this difference of opinion are, first, that the Department of Transport cannot simultaneously argue that the green wedge considerations are so overriding that they rule out the use of the quarry as a site for a motorway service area and, at the same time, value the land as if the green wedge considerations were of no importance. Secondly, unless and until there is a properly worked out consideration of the Allington site, none of us will know what the sums involved are likely to be. However, we are aware that the Allington site would be much more heavily used than the Hollingbourne site.
I find it extremely encouraging that the Tonbridge and Mailing council, which does not want the green wedge damaged, argued against siting the motorway service area in the quarry, where, with great care, it will scarcely affect the visual wedge. It said:
Tonbridge and Mailing is unwilling to support the construction of a motorway service area at Allington Quarry unless and until a developer demonstrates an overwhelming case of need. An essential element of such a case would be evidence of the Secretary of State's rejection of all other alternative sites.
Therefore, the issue stays with the Minister. He has it in his power to reverse the bureaucratic mud slide that threatens to engulf the most environmentally-sensitive area of my lovely constituency.
When Lord Jenkin, then Secretary of State for the Environment, did us the honour of inspecting the site, he


told us that although we would have to accept either the interchange or the service area, it would be intolerable to have to suffer both.
In this debate I speak as the hon. Member for Mid-Kent. However, I also speak for my hon. Friends the Members for Maidstone and for Faversham (Mr. Moate) who is president of the North Downs Society. My hon. Friend the Member for Faversham would have been present if it were possible. However, I believe that I do not speak just for my hon. Friends and our constituents. I speak for the millions who, between now and the end of the century, will come to Kent looking for the essential England — the historic, small-scale, solid, ungarish England of Led the Saxon whose castle stands at Leeds and of the Canterbury pilgrims who knew, when they got to Hollingbourne, that they did not have much further to go.
If we have to explain to those visitors that the garish motorway service area — even before its inevitable expansion it will dwarf the conservation areas around it and it will till the night sky all the year round with reflective light — could have been sited in a disused quarry where nobody lives, where nobody could see it and where no part of it would intrude on the environment, they will look at us as we would on the residents of some Third world country who turn a unique temple into a lorry assembly plant.
As I said at the beginning of my speech, I do not seek to press the Minister for a decision today. Even if I could, it would be improper for me to do so. I ask only whether he will produce a fully worked-out proposal for the Allington quarry site, which was the first choice of his own Department's consultant in years gone by, before he makes his final choice. I believe that so much has changed since his original decision was taken that it would be prudent and generous of the Minister to accede to my request.

The Parliamentary Under-Secretary of State for Transport (Mr. Peter Bottomley): No decision will be taken on the proposal for a motorway service area at Hollingbourne until my right hon. Friends the Secretaries of State for Transport and for the Environment have received the inspector's report of the inquiry and have carefully considered that report. I hope that that is a partial assurance to my hon. Friend. He has drawn this matter to the attention of the House and has spoken about our hon. Friends who would have liked to express concern. It is of passing interest that not a single hon. Member of another party is involved in that environmental or transport issue.
My hon. Friend is keen to see good road communications in Kent, whether for pilgrims or for others. I noted with interest the views he put forward on television last week on procedures to help establish such roads. I thought that that was sensible and brave, but I cannot guarantee to accept those proposals, either.
We regard the provision of motorway service areas—MSAs — as an essential part of the motorway system and have carefully formulated a strategy for their provision. No doubt many former pilgrims would have been grateful if our medieval ancestors had done the same, because pilgrims experienced problems in getting refreshment on route.
My hon. Friend knows that our specific proposals for an MSA at Hollingbourne have been the subject of a public inquiry. I will take the opportunity to explain why we regard MSAs as being essential, why we selected a site at Hollingbourne, and that we propose to minimise environmental intrusion there.
Unless services are available beside the motorway, vehicles will leave the motorway to find them on local roads. Such detours defeat the heavy investment in motorways and the important public benefits they provide of faster, cheaper and safer journeys reducing traffic congestion; and improving safety in the communities bypassed.
My hon. Friend sensibly made the point about people taking rat runs, even in the country, to avoid congestion. An additional advantage of MSAs is that they enable drivers to take a rest, thus increasing their alertness when continuing their journeys and contributing further to road safety. About one motorist in six tends to come off the motorway to go to a service area. If there are no motorway service areas obviously they cannot do that. They are a significant advantage and convenience to many motorists who would otherwise have to pass by.
Organisations and individuals have stressed the need for MSAs to be provided. MSAs have always been an important feature of motorways in England. In deciding on the number to be provided, the advantages to the motorist of frequent services have to be weighed against the financial and environmental costs, the likely commercial viability and the general policy of severely restricting accesses to motorways. We don't expect motorway users to have to travel more than about 30 miles or half an hour's driving between service areas.
Following consultation with local authorities and other interested parties in 1983, we established in 1984 a strategy of providing four MSAs at the cardinal compass points of the M25, together with MSAs about 15 to 20 miles outside the orbital motorway, where they do not already exist, on major feeder motorways, including the M20. Consultants were appointed to assist the Secretary of State in deciding the provision of MSAs on the M20 in the Maidstone area and in the Folkestone area. Two were short-listed out of nine potential sites in an 11-mile corridor centred on Maidstone. Those were Hollingbourne and Allington quarry, which is also known as Coldharbour. There is no strategic need for services between Westenhanger and Maidstone.
We considered carefully the consultants' findings on the two Maidstone options. In particular we noted the conclusion that Allington quarry was preferable on environmental grounds and would serve more travellers. There were major problems about Allington quarry site. The government believed that it was desirable for the MSA in the Maidstone area to be built so as to be open by the time the M20 extension from Maidstone to Ashford was opened. My hon. Friend talked about Kent county council's view. We understood that the county council shared our view. The Allington quarry site could not be developed without the concurrent improvement of junction 5.

Mr. Rowe: My understanding is that Kent county council has said that it would prefer to see environmental considerations given precedence over the need to have the site opened concurrently with the link.

Mr. Bottomley: My hon. Friend knows that I cannot get into what was before the inquiry. I am stating the view that we understood Kent county council to hold.
It was thought that the widening of the M20 and the improvement of junction 5 were unlikely to occur until 1993 at the earliest, and perhaps later. It was thought that Hollingbourne could be developed in time to open with the M20 extension in 1990. A major problem with Allington was the prospect that an MSA would not be open until at least three years after the completion of the M20 Maidstone to Ashford extension. That remains the position. The second major problem about Allington was a financial one. I shall not go into the details of that. I would cover ground that has been covered elsewhere.
It may be said that we have a policy of going for MSA sites in the open country, simply because they will tend to be cheaper than sites in urban or near urban areas. I assure the House that that is not our policy, as any review of our current MSAs will show. We try to choose sites that are the best in the light of all relevant factors. But we cannot ignore cost.
At my hon. Friend's request, I met representatives of the local planning authority, the parish council and the Hollingbourne society to hear their concern at first hand. I remain convinced that Hollingbourne represents the best balance of all relevant factors. Great care has been taken in preparing the site layout that will minimise environmental intrusion. Fear of environmental intrusion causes most local concern.
My hon. Friend expressed particular concern about the possible impact on views from the North Downs, from Pilgrim's way and from Leeds castle, as well as from Eyhorne street and from Hollingbourne itself. I shall explain briefly how we propose to minimise the intrusion. We do not intend to have pedestrian access to motorway service areas. The fear of having a car park for Leeds castle will not be borne out in practice.
The overall aim is to integrate the development into its surroundings, as far as possible, to mitigate any visual intrusion, and to create an attractive setting for users of the facilities.
In the design of the site layout and the landscape proposals, particular attention has been paid to views into the site from nearby properties and from the North Downs, to develop measures for minimising visual impact. Use is made of the existing landform and vegetation, as well as the proposed motorway embankment and the landscape proposals for the M20. Specific measures to reduce visual impact include the use of surplus soil to form mounds along the most sensitive boundaries. They will be beneficial upon completion of the works and before full establishment of the planting.
The lorry and coach parks—intrusive and difficult to screen—have been sited in the lowest part of the site, where it is screened from the north by Cottage and Snarkhurst woods.
The Department is seeking to acquire a 40 m strip parallel to and to the north of the London-Ashford railway line, that is, part of Snarkhurst and Cottage woods, to ensure that an adequate height of tree cover is retained to effect screening of the MSA, particularly in views from the north, those from the Broad street area on the Pilgrim's way and the important long-distance footpath, the North Downs way. The Department considers it essential that the 40 m width of Snarkhurst and Cottage woods be acquired as part of the MSA and that it be managed under departmental control. A management scheme would be prepared with the aim to achieve and maintain a healthy tall screen of vegetation, while preserving the character and ecology of the woodland.
In view of the landscape quality of the area, it has been agreed that the lighting sources for the various areas be kept lower than would normally be adopted. I cite one example. The height of column for the integral perimeter road would normally be 12 m. In this instance a 10 m height is proposed. By adopting a lower light source height for the required illumination of the site, it will be well below the top of Snarkhurst and Cottage woods as viewed from the north and seen against the background of Snarkhurst wood as viewed from the south.
That is a brief explanation of our general strategy for motorway service area provision and the particular care that we would take at Hollingbourne. I hope that, to some extent, that assures my hon. Friend of our commitment to a well-balanced and caring development of the proposed MSA on the M20. He asked me to refer to other aspects of work. It is a sensible convention that decision on such issues are taken after the benefit of the independent, impartial inspector's advice, following the conclusion of the public inquiry.
Through my hon. Friend, I say to our colleagues who cannot be here and to my hon. Friend's constituents that there has not been a more effective demonstration of local concern than that which was put forward by my hon. Friend and his constituents. They put their views forward in a firm but courteous way. In reading the newspapers, listening to them, face to face, and going round the area, I have reached an appreciation of the concerns, and of some of the issues which would have been put forward firmly by my hon. Friend if he had had time to raise them. If the MSA goes ahead, some of those concerns may turn out to be less of a problem than people imagine. However, to pursue that would take me into sectors in which I do not want to trespass.
All in all, motorway service areas, together with our roads programme, are designed to bring economic benefit, environmental relief and road safety advantages. MSAs are an important part of this, although I appreciate the concern about where they go and where they might have to go.

Question put and agreed to.

Adjourned accordingly at Three o'clock.